Finance

Satellite telephony company Viasat (VSAT -1.30%) had quite a memorable week as far as its stock went. Driven by broad investor optimism on space-related titles generally and recent positive company-specific news items, it booked a near-double-digit gain over the period. According to data compiled by S&P Global Market Intelligence, Viasat’s share price rose in excess of 9% across the week.

Viable Viasat

What also helped was a live demonstration of its capabilities. On Thursday in Mexico City, Viasat put its direct-to-device satellite service through its paces.

Image source: Getty Images.

During the demonstration, Viasat sent text messages between two Android smartphones, one of which was linked to its satellite network and one through a traditional cellular matrix. It also flexed its satellite-powered services through a different device, the HMD Offgrid.

In the press release detailing the demonstration, the company quoted its general manager of Viasat Mexico Hector Rivero as saying that “This technology has the ability to bridge the connectivity gap in areas where traditional services are unreliable or non-existent, opening up possibilities for millions of individuals and devices to connect through satellite.”

“We are confident that this will have significant advantages for consumers and various industries worldwide,” he added.

Major contract in force

Viasat’s services seem to be striking a chord with major institutional customers, at least. Earlier this month, the company announced, no doubt happily, that it had earned a prime contract award from the U.S. Space Force. This will see it contribute to a dedicated satellite network for that branch of the American military.

KLA (KLAC 0.81%), a company that makes crucial equipment for the manufacturing of microchips, was producing some tasty gains for its shareholders this week. These are frothy times for U.S. chip companies, and by extension, KLA should do well too. Over the course of the past few days, two bullish new takes from analysts bolstered the buy case for this company in particular.

According to data compiled by S&P Global Market Intelligence, KLA’s share price increased by nearly 13% over the course of the week on these tailwinds.

Components maker to the chip stars

Both of those prognosticator updates were published before the market open on Monday, helping to set the bullish tone for KLA stock in the subsequent days.

Image source: Getty Images.

The first came from Bank of America Securities’ Vivek Arya, who cranked his KLA price target a full 30% higher to $1,300 per share from his previous level of $1,000. He also maintained his buy recommendation on the stock.

According to reports, Arya wrote that he’s detecting signs of higher investment into dynamic random access memory (DRAM) production. On top of that, the great thirst for the advanced processors necessary to power artificial intelligence (AI) functionalities should help raise the fortunes of chipmakers generally — and their suppliers.

Another bull maintains his buy rating

Soon after that report was disseminated, Stifel‘s Brian Chin pulled the lever on a more modest raise. Chin lifted his KLA price target to $1,050 from $922. Like Arya, he kept his buy recommendation on the shares intact.

Both these takes feel realistic. Broadly speaking, this is a fine time to be invested in stocks throughout the chip sector, provided they’re not (yet) too expensive on their valuations.

Shares of database and cloud giant Oracle (ORCL -6.72%) plunged as much as 8.1% on Friday, before recovering slightly to a 6.9% decline on the day.

Oracle held an analyst-attended Investor Day presentation yesterday, where the company clarified some of its long-term targets. While the guidance to 2030 was fairly impressive, it appears investors are “selling the news” after the stock’s tremendous gains over the past couple of months.

Oracle lives up to some of the hype, but investors wanted more

In the presentation, Oracle gave some more detail around its cloud infrastructure growth and margins out over the long term. Oracle’s cloud growth has been a subject of some debate, especially after the company announced a massive 359% growth in its cloud RPO in September to $455 billion, with the majority of that growth coming from a single contract with OpenAI.

Some were skeptical about that projection, as well as the margins on the project, given the huge customer concentration around OpenAI, with one analyst noting that Oracle was only making a 14% gross margin on its cloud infrastructure services today.

However, Oracle disclosed yesterday that it predicts between 30% and 40% gross margin on its large cloud infrastructure deals, which is higher than what was feared. Moreover, Oracle projected a whopping $225 billion in revenue by 2030, as well as $21 per share in earnings. Of that revenue, management expects about $166 billion to come from Oracle’s cloud infrastructure unit by that time.

Those targets were actually above the analyst consensus heading into the day. And yet, the stock still sold off on that news. After today’s plunge, Oracle’s stock trades around $291 per share, or 13.9 times that 2030 earnings figure.

That seems strikingly cheap, but investors should remember that it’s only 2025, and there is a time value of money to account for when valuing a stock through the discounted cash flow method.

Moreover, a 30% to 40% gross margin on the cloud operations may still be disappointing to some, given that leader Amazon Web Services has already achieved a 36.8% operating margin — not gross margin, but operating margin — over the past 12 months.

Image source: Getty Images.

Oracle made its big AI play, and investors are divided

It should be noted that while investors are selling the news today, analysts are actually raising their Oracle price targets, with sell-side analysts at Guggenheim and T.D. Cowen both raising their price targets to $400, up from $375, after the event.

Oracle has made its AI gambit by partnering with OpenAI, betting big on the success of the current industry leader. OpenAI has committed to hundreds of billions in cloud contracts, even though it’s currently losing money, having made a reported $4.3 billion in revenue in the first half of 2025 and burning through $2.5 billion in cash.

So, Oracle’s anticipated growth may carry more risk than the typical cloud giant, and it appears investors took some of that risk off the table on Friday.

Image source: The Motley Fool.

Date

Friday, Oct. 17, 2025, at 8 a.m. ET

Call participants

• President & Chief Executive Officer — Mikael Bratt
• Chief Financial Officer — Fredrik Westin
• Vice President, Investor Relations — Anders Trapp

Need a quote from a Motley Fool analyst? Email [email protected]

Risks

• Regional Production Mix — Adjusted operating margin was negatively impacted by a 20 basis point dilution in Q3 2025, due to not-yet-recovered tariffs and the partial recovery of tariff compensations.
• Engineering Income Decline — “We expect higher depreciation costs due to new manufacturing capacity to meet demand in the key regions, and that the temporary decline in engineering income will persist, driven by the timing of specific customer development projects,” said CEO Mikael Bratt.
• European OEM Production Stoppages — “We continue to see downside risks for Europe’s light vehicle production, driven by announced production stoppage at several key customers,” explained Bratt.

Takeaways

• Net Sales — $2.7 billion, up 6% year-over-year, with organic sales growth of 4% excluding currency effects and including tariff compensation.
• Adjusted Operating Income — $271 million, up 14% year-over-year, with a 10.0% adjusted operating margin, 70 basis points above last year.
• Gross Margin — 19.3%, an increase of 130 basis points year-over-year, primarily driven by improved direct labor efficiency, headcount reductions, and supplier compensation.
• Operating Cash Flow — $258 million in operating cash flow, representing a 46% increase, supported by higher net income and a net $53 million negative impact from working capital.
• Free Operating Cash Flow — $153 million in Q3 2025 compared to $32 million in Q3 2024, due to higher operating cash flow and a $40 million reduction in net capital expenditures.
• Adjusted EPS — Diluted adjusted earnings per share increased 26% or $0.48, mainly from $0.29 higher operating income, $0.09 taxes, and $0.08 lower share count.
• Shareholder Returns — Dividend raised to $0.85 per share; $100 million in share repurchases completed, with 0.8 million shares retired.
• China Performance — Sales to Chinese domestic OEMs grew by nearly 23%, outpacing their light vehicle production growth by 8%.
• India Performance — India contributed one-third of global organic growth, now representing 5% of total sales, with content per vehicle rising from $120 in 2024 to $140 in 2025.
• Tariff Compensation — 75% of tariff costs recovered; remainder expected to be compensated by year-end.
• Capital Expenditures — CapEx net was 3.9% of sales, down from 5.7% in Q3 2024, with company guidance now at 4.5% for the full year 2025.
• Leverage Ratio — Net leverage at 1.3 times, maintained below the 1.5 times target.
• Strategic Initiatives — New second R&D center in China, partnership with CATARC, and a joint venture with HSAE to produce advanced safety electronics announced.
• Outlook and Guidance — Organic sales projected to increase by ~3% and adjusted operating margin expected at 10%-10.5% for full-year 2025; operating cash flow guidance of ~$1.2 billion; tax rate forecasted at ~28%.

Summary

Autoliv (ALV -2.72%) delivered record net sales and adjusted operating income in Q3 2025, reflecting successful execution of efficiency initiatives. Management confirmed transactions to deepen presence in China and cited the joint venture with HSAE as an entry into advanced automotive safety electronics. Working capital increased by $197 million in Q3 2025 compared to Q3 2024, mainly due to higher accounts receivable from strong sales and delayed tariff reimbursements, which management described as temporary effects. The company achieved a 94% coil-off accuracy rate in Q3 2025, highlighting this improvement as a significant contributor to its operational targets. Light vehicle production outperformed the market, driven by strong organic momentum in India and among Chinese OEMs, although negative regional and customer mixes offset some gains in Q3 2025.

• Chief Financial Officer Fredrik Westin said, “The $50 million there is a one-time, and it is compensation from a supplier for historical costs that we had versus our customers there. It is one time in the quarter here, for previous costs that we have had.”
• Management noted, “we expect to be in the middle of the range” for full-year 2025 adjusted operating margin guidance, after citing headwinds from lower out-of-period inflation compensation, higher depreciation, and temporary engineering income declines heading into the fourth quarter.
• CEO Mikael Bratt stated, “Expanding in China is key to strengthening Autoliv’s innovation, global competitiveness, and long-term growth,” underlining China as a principal driver of strategy and resource allocation.
• The shift toward normalized capital expenditures follows the completion of large-scale, multi-region footprint investments over recent years, enabling lower capital intensity moving forward.

Industry glossary

• Coil-off Accuracy: Percentage metric tracking adherence of parts inventory depletion to schedule, reflecting production planning effectiveness and supply chain reliability.
• OEM: Original Equipment Manufacturer; refers here to carmakers that buy Autoliv’s safety products for installation in new vehicles.
• ECU: Electronic Control Unit, a core component in automotive electronics, governing safety features like active seatbelts and detection systems.
• RD&E: Research, Development & Engineering expenses, comprising spending on new products, process improvement, and engineering-driven customer projects.
• CapEx: Capital expenditures, defined as spending on property, plant, and equipment.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Autoliv, Inc. third quarter 2025 financial results conference call and webcast. (Operator Instructions) Please note that today’s conference is being recorded. I would now like to turn the conference over to your first speaker, Anders Trapp, Vice President of Investor Relations.

Please go ahead.

Anders Trapp: Thank you, Lars. Welcome, everyone, to our third quarter 2025 earnings call. On this call, we have our President and Chief Executive Officer, Mikael Bratt; our Chief Financial Officer, Fredrik Westin; and me Anders Trapp, VP, Investor Relations. During today’s earnings call, we will highlight several key areas, including our record-breaking third quarter sales and earnings, as well as our continued strategic investments to drive long-term success with Chinese OEMs. We also provide an update on market developments and the evolving tariff landscape impacting the automotive industry.

Finally, our robust balance sheet and strong asset returns reinforce our financial resilience and support sustained high levels of shareholder returns. Following the presentation, we will be available to answer your questions. And as usual, the slides are available at autoliv.com.

Turning to the next slide, we have the Safe Harbor Statement, which is an integrated part of this presentation and includes the Q&A that follows. During the presentation, we will reference some non-U.S. GAAP measures. The reconciliations of historical U.S. GAAP and non-U.S. GAAP measures are disclosed in our quarterly earnings release available on autoliv.com and in the 10-Q that will be filed with the SEC or at the end of this presentation. Lastly, I should mention that this call is intended to conclude with a reach CET, so please wait for your questions in person. I now hand it over to our CEO, Mikael Bratt.

Mikael Bratt: Thank you, Anders. Looking on the next slide, I am pleased to share yet another record-breaking quarter, underscoring our strong market position. This success is a testament to the strength of our customer relationships and our commitment to continuous improvement as we navigate the complexities of tariffs and other challenging economic factors. We saw a significant sales growth driven by higher-than-expected light vehicle production across multiple regions, especially in China and North America. Our high growth in India continues, accounting for one-third of our global organic growth. I am pleased to highlight that our sales growth with Chinese OEMs has returned to outperformance, driven by recent product launches and encouraging development.

Looking ahead, we anticipate to significantly outperform light vehicle production in China during the fourth quarter. We improved our operating profit and operating margin compared to a year ago. This strong performance was primarily driven by well-executed activities to improve efficiency, higher sales, and a supplier compensation for an earlier recall. We successfully recovered approximately 75% of the tariff costs incurred during the third quarter and expect to recover most of the remaining portions of existing tariffs later this year. The combination of not-yet-recovered tariffs and the dilutive effects of the recovered portion resulted in a negative impact of approximately 20 basis points on our operating margin in the quarter.

We also achieved record earnings per share for the third quarter. Over the past five years, we have more than tripled our earnings per share, mainly driven by strong net profit growth but also supported by a reduced share count. Our cash flow remained robust despite higher receivables driven by higher sales and tariff compensations later in the quarter. Our solid performance, combined with a healthy debt level ratio, supports continuous strong shareholder returns. We remain committed to our ambition of achieving $300 to $500 million annual in stock repurchases, as outlined during our Capital Markets Day in June.

Additionally, we have increased our quarter dividend to $0.85 per share, reflecting our confidence in our continued financial strength and long-term value creation. Expanding in China is key to strengthening Autoliv’s innovation, global competitiveness, and long-term growth. To support our growing partnerships with Chinese OEMs, we are investing in a second R&D center in China. In October, we announced a new important collaboration in China, as illustrated on the next slide. We have signed a strategic agreement with CATARC, the leading research institution setting standards in the Chinese automotive sector. This partnership marks a new chapter in our commitment to shaping the future of automotive safety.

Together with CATARC, we aim to define the next generation of safety standards and enhance the safety on the roads in China and globally. We are also broadening our reach in automotive safety electronics, as shown on the next slide. We recently announced our plans to form a joint venture with HSAE, a leading Chinese automotive electronics developer, to develop and manufacture advanced safety electronics. The joint venture will concentrate on high-growth areas in advanced safety electronics, including ECUs for active seatbelts, hands-on detection systems for steering wheels, and the development and production of steering wheel switches.

Through this new joint venture, we intend to capture more value from steering wheels and active seatbelts while minimizing CapEx and competence expansions, enabling faster market entry with lower technology and execution risks. Looking now on financials in more detail on the next slide. Third quarter sales increased by 6% year-over-year, driven by strong outperformance relative to light vehicle production in Asia and South America, along with favorable currency effects and tariff-related compensations. This growth was partly offset by an unfavorable regional and customer mix. The adjusted operating income for Q3 increased by 14% to $271 million, from $237 million last year. The adjusted operating margin was 10%, 70 basis points better than in the same quarter last year.

Operating cash flow was a solid $258 million, an increase of $81 million, or 46% compared to last year. Looking now on the next slide, we continue to deliver broad-based improvements, with particularly strong progress in direct costs and SG&A expenses. Our positive direct labor productivity trend continues as we reduced our direct production personnel by 1,900 year-over-year. This is supported by the implementation of our strategic initiatives, including automation and digitalization. Our gross margin was 19.3%, an increase of 130 basis points year-over-year. The improvement was mainly the result of direct labor efficiency, headcount reductions, and compensation from a supplier.

Our G&E net costs rose both sequentially and year-over-year, primarily due to lower engineering income due to timing of specific customer development projects. Thanks to our cost-saving initiatives, SG&A expenses decreased from the first half-year level. Combined with the increased gross margin, this led to 70 basis points improvement in adjusted operating margin. Looking now on the market developments in the third quarter on the next slide. According to S&P Global data from October, global light vehicle production for the third quarter increased 4.6%, exceeding the expectations from the beginning of the quarter by 4 percentage points. Supported by the scrapping and replacement subsidy policy, we continue to see strong growth for domestic OEMs in China.

Light vehicle demand and production in North America have proven significantly more resilient than previously anticipated. In contrast, light vehicle production in other high-content-per-vehicle markets, namely Western Europe and Japan, declined by approximately 2% to 3%, respectively. The global regional light vehicle production mix was approximately 1 percentage point unfavorable during the quarter, despite the important North American market showing a positive trend. In the quarter, we did see coil-off volatility continue to improve year-over-year and sequentially from the first half-year. The industry may experience increased volatility in the fourth quarter, stemming from a recent fire incident at an aluminum production plant in North America and production adjustments by a key European customer in response to shifting demand.

We will talk about the market development more in detail later in the presentation. Looking now on sales growth in more detail on the next slide. Our consolidated net sales were over $2.7 billion, the highest for the third quarter so far. This was around $150 million higher than last year, driven by price volume, positive currency translation effects, and $14 million from tariff-related compensations. Excluding currencies, our organic sales growth by 4%, including tariff costs and compensations. China accounted for 90% of our group sales. Asia, excluding China, accounted for 20%. Americas for 33%, and Europe for around 28%. We outline our organic sales growth compared to light vehicle production on the next slide.

Our quarterly sales were robust and exceeded our expectations, driven by strong performance across most regions, particularly in the Americas, West Asia, and China. Based on light vehicle production data from October, we underperformed light vehicle production by 0.7% globally, as a result of a negative regional mix of 1.3%. We underperformed slightly in Europe, primarily due to an unfavorable model and customer mix. In the rest of Asia, we outperformed the market with 8%, driven primarily by strong sales growth in India and, to a lesser extent, in South Korea.

While the organic light vehicle production mix shifts continued to impact our overall performance in China, our sales to domestic OEMs grew by almost 23%, 8% more than their light vehicle production growth. Our sales development with the global customers in China was 5% lower than their light vehicle production development, as our sales declined to some key customers, such as Volkswagen, Toyota, and Mercedes. On the next slide, we show some key model launches. The third quarter of 2025 went through a high number of new launches, primarily in Asia, including China. Although some of these new launches in China remained undisclosed here due to confidentiality, the new launches reflect a strong momentum for Autoliv in these important markets.

The models displayed here feature Autoliv content per vehicle from $150 to close to $400. We’re also pleased to have launched airbags and seatbelts on another small Japanese vehicle, A-Cars. This is a meaningful forward step because Autoliv has historically had limited exposure to this segment in Japan. In terms of Autoliv’s sales potential, the Onvo L90 is the most significant. Higher content per vehicle is driven by front center airbags on five of these vehicles. Now looking at the next slide, I will now hand it over to Fredrik Westin.

Fredrik Westin: Thank you, Mikael. I will talk about the financials more in detail now on the slides, so turn to the next slide. This slide highlights our key figures for the third quarter of 2025 compared to the third quarter of 2024. The net sales were approximately $2.7 billion, representing a 6% increase. The gross profit increased by $63 million, and the gross margin increased by 130 basis points. The drivers behind the gross profit improvement were mainly lower material costs, positive effects from the higher sales, and improved operational efficiency. This was partly offset by negative effects from recalls and warranty, depreciation, and unrecovered tariff costs.

The adjusted operating income increased from $237 million to $271 million, and the adjusted operating margin increased by 70 basis points to 10.0%. The reported operating income of $267 million was $4 million lower than the adjusted operating income.

Adjusted earnings per share diluted increased 26% or by $0.48, where the main drivers were $0.29 from higher operating income, $0.09 from taxes, and $0.08 from a lower number of shares. This marks our ninth consecutive quarter of growth in adjusted earnings per share, underscoring the strength of our ongoing operational improvements and further bolstered by a reduced share count from our share buyback program. Our adjusted return on capital employed was a solid 25.5%, and our adjusted return on equity was 28.3%. We paid a dividend of $0.85 per share in the quarter, and we repurchased shares for $100 million and retired 0.8 million shares. Looking now on the adjusted operating income bridge on the next slide.

In the third quarter of 2025, our adjusted operating income increased by $34 million.

Operations contributed with $43 million, mainly from high organic sales and from the execution of operational improvement plans supported by better coil-off volatility. The out-of-period cost compensation was $8 million lower than last year. Costs for RD&E net and SG&A increased by $30 million, mainly due to lower engineering income. The net currency effect was $6 million positive, mainly from translation effects. Last year’s supplier settlement and this year’s supplier compensation combined had a $29 million positive impact. The combination of unrecovered tariffs and the dilutive effect of the recovered portion resulted in a negative impact of approximately 20 basis points on our operating margin in the quarter. Looking now at the cash flow on the next slide.

The operating cash flow for the third quarter of 2025 totaled $258 million, an increase of $81 million compared to the same period last year, mainly as a result of higher net income, partly offset by $53 million negative working capital effects. The negative working capital was primarily driven by higher receivables, reflecting strong sales and delayed tariff compensations toward the end of the quarter. Capital expenditures net decreased by $40 million. Capital expenditures net in relation to sales was 3.9% versus 5.7% a year earlier. The lower level of capital expenditures net is mainly related to lower footprint CapEx in Europe and Americas and less capacity expansion in Asia.

The free operating cash flow was $153 million compared to $32 million in the same period the prior year from higher operating cash flow and the lower CapEx net.

The cash conversion in the quarter, defined as free operating cash flow in relation to the net income, was around 87%, in line with our target of at least 80%. Now looking at our trade working capital development on the next slide. The trade working capital increased by $197 million compared to the prior year, where the main drivers were $165 million in higher accounts receivables, $8 million in higher accounts payables, and $40 million in higher inventories. The increase in trade working capital is mainly due to increased sales and temporarily higher inventories. In relation to sales, the trade working capital increased from 12.8% to 13.9%.

We view the increase in trade working capital as temporary, as our multi-year improvement program continues to deliver results. Additionally, enhanced customer coil-off accuracy should enable a more efficient inventory management. Now looking at our debt leverage ratio development on the next slide.

Autoliv’s balanced leverage strategy reflects our prudent financial management, enabling resilience, innovation, and sustained stakeholder value over time. The leverage ratio remains low at 1.3 times, below our target limit of 1.5 times, and has remained stable compared to both the end of the second quarter and the same period last year. This comes despite returning $530 million to shareholders over the past 12 months. Our net debt increased by $20 million, and the 12 months trailing adjusted EBITDA was $41 million higher in the quarter. With that, I hand it back to you, Mikael.

Mikael Bratt: Thank you, Fredrik. On to the next slide. The outlook for the global auto industry has improved, particularly for North America and China.

While the industry continues to navigate the trade volatility and other regional dynamics, S&P now forecasts global light vehicle production to grow by 2% in 2025, following growth of over 4% in the first nine months of the year. Their outlook for the fourth quarter has significantly improved. Nevertheless, they still anticipate a decline in light vehicle production of approximately 2.7% in the quarter. In North America, the outlook for light vehicle production has been significantly upgraded, driven by resilient demand and low new vehicle inventories. However, a recent fire incident at an aluminum production plant in North America may impact our customers.

For Europe, S&P forecasts a 1.8% decline in light vehicle production for the fourth quarter, despite some easing of U.S. import tariffs. We continue to see downside risks for Europe’s light vehicle production, driven by announced production stoppage at several key customers.

In China, light vehicle production is expected to decline by 5%, primarily due to an exceptionally strong Q4 in 2024. Nevertheless, S&P anticipates sustained growth in Chinese LVP over the medium term, supported by favorable government policies for new energy vehicles, more relaxed auto loan regulations, and increasing export volumes. The outlook for Japan’s light vehicle production has improved, as car makers are increasingly shifting exports to markets outside the U.S., aiming to mitigate reduced export volumes to the U.S. In South Korea, domestic demand has been steadily recovering, while exports have also risen, driven by increased shipments to other regions, compensating for the decline in exports to the U.S. Now looking on our way forward on the next slide.

We expect the fourth quarter of 2025 to be challenging for the automotive industry, with lower light vehicle production and geopolitical challenges.

However, our continued focus on efficiency should help offset some of these headwinds. Consistent with typical seasonal patterns, the fourth quarter is expected to be the strongest of the year. Despite the expected decline in global light vehicle production year-over-year, we foresee higher sales and continued outperformance, particularly in China. Unfortunately, we are also facing some year-over-year headwinds. Unlike the past three years, we do not expect out-of-period inflation compensation in the fourth quarter, given the shift in the inflationary environment. We expect higher depreciation costs due to new manufacturing capacity to meet demand in the key regions, and that the temporary decline in engineering income will persist, driven by the timing of specific customer development projects.

These factors combine in the reason for why we currently expect the full-year adjusted operating margin to come in at the midpoint of the guided range.

However, our solid cash conversion and balance sheet provide fast expansions and a robust foundation for maintaining high shareholder returns. Turning to the next slide. This slide shows our full-year 2025 guidance, which excludes effects from capacity alignment and antitrust-related matters. It is based on no material changes to tariffs or trade restrictions that are in effect as part of 2025, as well as no significant changes in the macroeconomic environment or changes in customer coil-off volatility or significant supply chain disruptions. Our organic sales are expected to increase by around 3%. The guidance for adjusted operating margin is around 10% to 10.5%.

With only one quarter remaining of the year, we expect to be in the middle of the range. Operating cash flow is expected to be around $1.2 billion. We now expect CapEx to be around 4.5% of sales, revised from the previous guidance of around 5%.

Our positive cash flow and strong balance sheet support our continued commitment to a high level of shareholder return. Our full-year guidance is based on a global light vehicle production growth of around 1.5% and a tax rate of around 28%. The net currency translation effect on sales will be around 1% positive. Looking on the next slide. This concludes our formal comments for today’s earnings call, and we would like to open the line for questions from analysts and investors. I now hand it back to Ras.

Operator: Thank you, Sir. As a reminder to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We are now going to proceed with our first question. The questions come from the line of Colin Langan from Wells Fargo Securities. Please ask your question.

Colin Langan: Oh, great. Thanks for taking my questions. You raised your light vehicle production forecast, you know, from down a half to up 1.5%, but organic sales didn’t change. Why aren’t you seeing any benefit from the stronger production environment on your organic?

Fredrik Westin: Yeah. Thanks for your question. There are a couple of components here. I mean, the first one is that some of these adjustments that we also now take into account are for past quarters. Some of the volumes have been raised also in the first half, whereas we had already recorded our sales for that. That doesn’t, yeah. We had a different outdoor underperformance in the first half of the year. That’s one part of the explanation. We also see a larger negative mix now after nine months and also expect that for the full year.

That is close to 2 percentage points, this negative market mix, which is also one of the reasons, and that’s, say, even less unfavorable now than we saw a quarter ago. Those are some explanations.

On top of that, we see that some of the launches in China have been a bit delayed, and that they are not coming through fully in line with our expectations that we had here about a quarter ago. Those are the main reasons why you don’t see that LVP estimate increase come through on our organic sales guidance.

Colin Langan: Got it. The margin in the quarter was very strong. I thought Q3 is typically one of your weaker margins. Anything unusual in the quarter? I noticed you flagged supplier settlements. I kind of get the non-repeat of bad news last year. Is the $15 million of supplier compensation additional good news? Is that one-time in nature? How should we think of that? Anything else that’s maybe possibly one-time in nature in the quarter that drove the strong margin?

Fredrik Westin: Yeah. The $50 million there is a one-time, and it is compensation from a supplier for historical costs that we had versus our customers there. It is one time in the quarter here, for previous costs that we have had. I would say here also that, I think what you saw in the quarter here was that we had slightly higher sales than expected. That was an important component, of course. I think most importantly here is that we continue to see a very strong delivery of the internal improvement work that we are so focused on and that we have been focused on for a while, leading to our targets here.

Good work done by the whole Autoliv team here across the whole value chain.

Colin Langan: Got it. All right. Thanks for taking my questions.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Björn Inoson from Danske Bank. Please ask your question.

Björn Inoson: Hi. Thanks for taking my question. On your implied guidance for Q4 and also on your a little bit cautious comments on Q4, it looks like there are a little bit of temporary negative effects that you are talking about. Should we extrapolate the Q4 trends looking into 2026? Are you quite happy with the productivity work and also that coil-offs look again a little bit better? Should we have as a base assumption that you should progress again towards the midterm target of 12%? How should we look upon that? Thank you.

Fredrik Westin: Yeah. I think, first of all, that we feel confident when it comes to our ability to eventually get to our 12% target. No doubt about that. What you see here in the Q3, Q4 movement is nothing if you read into that. I think, as I said before, we see very good progress in terms of the activities that we control ourselves. We see really good traction when it comes to the strategic initiatives that we have outlined some time back. Good progress there. I think when you look at Q4 over Q4, it’s, I would say, more of, first of all, a normalization of the quarters. Q4 is still the strongest quarter in the year.

Of course, in the previous last two, three years, it has been more pronounced since we had this out-of-period compensation that we referred to earlier, which you will not see in the same way now in this quarter in Q4 2025. There is a difference there. I would say also, you have seen a little bit stronger Q3 when it comes to sales. There is a timing effect between Q3 and Q4 compared to when we looked into the second half. There is also a part of the explanation. The bottom line, we feel comfortable with our own progress towards the targets that we have. Maybe just to build on that, just one more detail on the fourth quarter.

We do expect that we will have a slightly lower engineering income also in the fourth quarter, as you saw now in the third quarter.

This is temporary, and it’s very dependent on how the engineering activities are with certain customers. This should then also recover in 2026.

Björn Inoson: Okay. Yeah. I saw that comment. Did you say it’s likely to be recovered in early next year then?

Fredrik Westin: In next year overall, yes.

Björn Inoson: Overall. Okay.

Fredrik Westin: You should see a recovery ratio that is more in line with or a bit higher now than what you see in the second half of this year. That’s, again, very dependent on engineering activities with certain customers and how they reimburse us.

Björn Inoson: Okay. Got it.

Fredrik Westin: Yeah. In some cases, it’s built in the piece price. In some cases, it’s paid like engineering income specifically. Depending on how that mix looks over time, of course, you have some smaller fluctuation. That is really what we refer to here.

Björn Inoson: Okay. Very clear. Thank you.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Gautam Narayan from RBC Capital Markets. Please ask your question.

Gautam Narayan: Hi. Thanks for taking the question. Maybe a follow-up to that last one, the Q4 guidance. You call out three headwinds: the less compensation on inflation, I guess the higher depreciation, and then this engineering income. Just wondering if you could dimensionalize those three in terms of order of magnitude for Q4. I mean, we know the engineering income is temporary. The other two, you know, I guess, depends on certain factors. Just trying to dimensionalize those three in terms of what is temporary and what continues. I have a follow-up.

Fredrik Westin: Yeah. I think the engineering income, you can look at Q3 on a year-by-year basis and how that as a % of sales. That, I think, is a pretty good indication also for how that could be in the fourth quarter. That’s the largest headwind we will have. The next one is the fact that we had this out-of-period compensation from our customers related to inflation compensation last year. That falls away this year. That’s the second largest. The third largest is the depreciation expense increase.

Gautam Narayan: Okay. On the China commentary, we did see that BYD is losing share in China due to some government initiatives and whatnot. I would have thought that alone would maybe benefit you guys more. I know macro in China, the domestics are doing better than the globals. I see that. I understand that. Just wondering if the share loss that BYD is seeing—I know you’re under-indexed to them—is benefiting you guys. Thanks.

Fredrik Westin: Yeah. I mean, in the overall mix, of course, since we are only selling components to them, and you see their portion of the total market, you know, flattening out, of course, it’s supportive in the sense of measuring our outperformance relative to the COEMs, LVP as such. Mathematically, yes, you have that effect there.

Gautam Narayan: Great, thanks a lot. I’ll turn it over.

Operator: Thank you. We are now going to proceed with our next question. Our next questions come from the line of Michael Aspinall from Jefferies. Please ask your question.

Michael Aspinall: Thanks, Sam. Good day, Mikael, Fredrik, and Anders. One first on India. It was one-third of the organic growth. Can you just remind us where we are in the shift in content per vehicle in India, and how large India is in terms of sales now?

Fredrik Westin: Yeah. I think we are. See the strong development in India there. As I said, one-third of the growth in the quarter. It’s today around 5% of our turnover is coming from India. It’s not long ago, it was around 2%. A significant increase of importance there. We have a very strong market share in India, 60%. Of course, we are benefiting well from the volume growth you see there. We are expecting India to continue to grow. We have also invested in our investment footprint there to be able to defend our market share and to capture the growth here.

Content-wise, we expect it to go from, you know, it went from $120 in 2024 to roughly $140 this year. You have both content and light vehicle production growth in India to look forward to.

We expect it to go further up to around $160 to $170 in the next couple of years.

Michael Aspinall: Great. Excellent. Thank you. One more. Just on the JV with Hang Cheng, who were you purchasing these items from before? Were you purchasing from Hang Cheng and now to JV, or have you formed a JV with them and were purchasing from someone else previously?

Fredrik Westin: I mean, they have been an important supplier to us in the past as well. Of course, we have worked with them and established a very good relationship there. I couldn’t say it has been exclusively with them. We have a global supplier base here, but we see great opportunity here to not only produce but also develop components for our future models and programs here as we work together here, both on development and manufacturing.

Michael Aspinall: Okay. They’re moving, I guess, from a supplier, and now you guys are going to be working together?

Fredrik Westin: Yeah, yeah, exactly.

Michael Aspinall: Okay. Great. Thank you.

Fredrik Westin: Thank you.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Vijay Rakesh from Mizuho. Please ask your question.

Vijay Rakesh: Yeah. Hi, Mikael. Just quickly on the China side, I know you mentioned subsidies. When you look at the NEV and the scrapping subsidy, I believe it is down like 50% this year. Do you expect that to be extended to 2026, or is there going to be another step down? Then follow up.

Mikael Bratt: Yeah. I would say we are not speculating in that. I guess it’s anybody’s guess here. I think overall, we definitely look very positively on China. As we have mentioned here before, we are growing our share with the Chinese OEMs here and had good developments in the quarter here. We are also investing in China as well here. As I mentioned in the presentation here earlier, I mean, we are investing in a second R&D center in Wuhan to make sure that we also continue to work closer with the broader base of customers there, so adding capacity. We talked about JV just now here. The partnership with CATARC here is an important step here.

All in all, looking positively on China going forward here for sure. Subsidies or not, we will see, but overall, it’s pointing in the right direction here.

Vijay Rakesh: Got it. As you look at the European market, a lot of talk about price competition and imports coming in from Asia and tariffs, etc. How do you see the European auto market play out for 2026? Thanks.

Mikael Bratt: Yeah. I think we wait to comment on ’26 for the next quarterly earnings here when it’s time for it. As we have said here for the remainder of the year, we are cautious about the European market more from a demand point of view than anything else. I think that’s really the main question mark around the market than anything else in terms of OEM reshuffling or anything like that. I mean, it’s really the end consumer question here.

Vijay Rakesh: Got it.

Mikael Bratt: When it comes to Europe.

Vijay Rakesh: Yeah.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Emmanuel Rosner from Wolfe Research. Please ask your question.

Emmanuel Rosner: Oh, great. Thank you so much. My first question is actually a follow-up. I think on Colin’s question around the organic growth outlook, which is unchanged despite the better LVP. I’m not sure that I understood all the factors, but if we wanted to frame it as like growth above market, initially, you were going to grow 3% despite a shrinking market. Now you’re growing 3% in a market that would be growing 1.5%. Can you maybe just go back over the factors that are driving this different expectations for outperformance?

Fredrik Westin: Yeah. In that sense, the largest change over the capital quarters here since we started the year is the negative market mix. As I said, we now see a negative market mix for the full year of around 2%. That has deteriorated over the course of the year. That’s the largest part. We have also seen here in the third quarter the negatives in customer mix for us, mostly in North America and Europe. That’s also a deviation to what we expected going into the year. The last one that I already mentioned before is that we see some delays on the new launches, in particular in China.

They’re not coming through at the same pace that we had expected originally.

Emmanuel Rosner: Understood. Thank you. If I go back to your framework and your midterm margin targets, can you just maybe remind us the drivers that will get you from the 10 to 10.5% this year to towards the 12%? Where are we tracking on some of those? I did notice that you mentioned improved coil-off accuracy, both sequentially and year-over-year. Is that something that you expect to continue in and that will be helpful for that?

Fredrik Westin: Yeah. I mean, the framework has not changed as you would probably expect. It’s still, if we take 2024 as the base point with 9.7% adjusted operating margin, we still expect 80 basis points improvement from the indirect headcount reduction. In the reported numbers here now, you don’t see a movement in that, but we had about 260 employees from a labor law change in Tunisia that we now have to account for headcount. That distorts that number. If you adjust for that, we would also have shown further progress on the indirect headcount reduction. That is well on track. We said 60 basis points from normalization of coil-offs. That is developing well.

We saw 94% coil-off accuracy here and also in the third quarter, which is an improvement on a year-over-year basis.

We also talked about that we have decreased our direct headcount by 1,900 people despite that organic growth was at 4% on a year-over-year basis. That’s tracking very well. The remaining 90 basis points would be from growth component, where we are maybe a little bit behind now this year as we laid, or as you talked about before, and from automation digitalization. There again, you can see, I think, on the gross margin, even if you exclude the settlement here with a supplier, you can also see there that we are progressing well on that component.

Emmanuel Rosner: Thank you.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Jairam Nathan from Daiwa Capital Markets America. Please ask your question.

Jairam Nathan: Hi. Thanks for taking my question. I just wanted to kind of go back to the announcement out of China. I just wanted to understand better the timing. It seems it kind of coincided with also the announcement of Adient, the zero-gravity product. Just one, is this timing related to some new business win or more opportunities there?

Fredrik Westin: You’re talking about JV or?

Jairam Nathan: The JV, the CATARC partnership, as well as the kind of announced you kind of finalized the Adient zero-gravity product. Yeah.

Fredrik Westin: I was going to say they’re not connected at all as such. The JV here is really to vertically integrate in an effective way together with a partner to gain a broader product offering here to say that we offer also, yeah, more to our end customer, basically. CATARC is, of course, a development collaboration to make safer vehicles, safer roads for everyone. It’s including light vehicles, commercial vehicles, and vulnerable road users, meaning two-wheelers, etc. It is a broad-based research collaboration there. The Adient, of course, is connected to the zero-gravity. I mean, yeah, to some extent, of course, they are all about safety products as such, but they are not connected in any way.

Jairam Nathan: Okay. Thanks. Just to follow up, I wanted to understand the lower CapEx. Is that something that can be maintained as a % of sales into the future?

Fredrik Westin: Yeah. I think, I mean, we have been talking about this in the past also that our ambition is to bring down the CapEx levels in relation to sales compared to where we have been. We have been through a cycle here where we have invested a lot in our facilities around the world, Europe, where we have consolidated and upgraded a number of plants, India investments we talked about before, expanding capacity in China. We also upgraded in Japan, etc. In the last couple of years, we have invested heavily in upgrading our industrial footprint. We are coming out now into a more normalized phase here. That is why we can bring it down here.

We are not expecting to see CapEx jump up back in the near term here.

Jairam Nathan: Okay, thank you. That’s fine.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Hampus Engellau from Handelsbanken. Please ask your question.

Hampus Engellau: Thank you very much. A quick question from my side. Maybe a bit of a nitty-gritty question, but if I remember correctly, you covered about 80% of the tariff cost in the second quarter, and the remaining 20% came in Q3. Now you’re moving around 20% for Q3 you will get in Q4. Is the net effect like 100% compensation if you account for the things that came from second quarter to Q3, or are you still a net negative there on the margin?

Fredrik Westin: Yeah, please go ahead. …  Oh, please go ahead. … Okay. Yeah. Sorry. Let’s take this first, so we’re done with that one. We are still net negative here. As we said, we have received some of the outstanding $20 million in the second quarter in Q3, but most of it remains still. In the third quarter here, we got $75 million. We have accumulated more outstandings from Q2 to Q3. As we have indicated here, we still expect to get full compensation and catch up on this in the fourth quarter close. I think we are fully compensated. That’s our expectations here. Of course, the work is ongoing here as we speak with that, but that’s the net result right now.

Hampus Engellau: Fair enough. The last question was more related to from what you see today in terms of launches for 2026, and you maybe compare that to 2025 if you could share some light on that.

Fredrik Westin: I have no figure yet for 2026 to share with you here, but I think in general terms, I mean, we have a good order intake here to support our overall market position here. We see, however, some mixed, especially on the EV side, planned programs or launches being delayed or canceled here. There are some reshuffling there. What kind of impact that will have in 2026 compared to 2025, we are not ready to communicate that yet. As I said, we have good order intake here to support our market position.

Hampus Engellau: Thank you very much.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Edison Yu from Deutsche Bank. Please ask your question.

Edison Yu: Hi. This is Winnie on for Edison. Thanks for taking the call. My first question is on the supplier contract news that came out of GM, indicating maybe like a more less favorable contract terms for suppliers on a go-forward basis. I’m just curious if this is something that’s more isolated and more depends on like the OEM, or do you see like heading into 2026 maybe a broader trend that can pose potentially as a headwind heading into next year? I have a follow-up.

Fredrik Westin: No, I don’t want to comment specific customer contracts or conditions here. Of course, it’s a constantly ongoing development here in terms of what the OEMs want to put into their contract. I would say that I see a good ability to manage those clauses and contracts that are put in front of us here. I must say I don’t feel any major concerns around a more difficult situation. I think we are quite successful in negotiating and settling contracts with our customers here. Nothing exceptional there from our point of view, I would say.

Edison Yu: Got it. Thank you. On the Ford supplier impact, you did mention some potential impacts into Ford Q. I was just curious if you can help us delineate that. Is that something to be concerned about, or is it more of a negligible impact for you guys?

Fredrik Westin: Yeah. I think, I mean, every car that is not produced is not a good thing, of course, especially for the customer in question here. You have seen the announcements made by the OEMs here. Just as a reference, the Ford 150 is around 1% of our global sales. It’s not good, but it’s manageable, I would say, from our point of view. Just as a reference.

Edison Yu: Thank you so much.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Dan Levy from Barclays Bank. Please ask your question.

Dan Levy: Hi. Great. Thank you for taking the question. I just wanted to follow up on that prior question. You know, the headlines on Xperia yesterday causing some potential supply issues. Just how much of that of a potential risk have you seen or heard on that in the fourth quarter for European production?

Fredrik Westin: For the European production, no, I think it’s too early to comment on that. I mean, it’s just a few days, hours, or almost into the situation here. I think, first of all, we have a very good supply chain team that are on alert here and are managing through the situation here. We have been here before with supply chain constraints. I would say the last couple of years, there’s been many topics here. The team is well prepared to maneuver through this. We’ll see and come back on that. I would say it’s too early to be too granular or too detailed around that. As I said, it’s early days here.

We don’t see too much yet from the customers.

Dan Levy: Thank you. Just as a follow-up, I wanted to double-click on the China performance. You did very well outperformance with the domestic OEMs. In spite of that, the total China performance was negative 3 points, even though the domestics are the clear majority. I think we were all a bit surprised. I know you sort of unpacked this a bit before in one of the prior questions. Can you maybe just explain the dynamics of why, even though you outperformed the domestics, the overall China performance was negative? What can you explain what flips going forward that is leading you to say that your China growth going forward should outperform?

Fredrik Westin: Yeah. I mean, we still, for us, as we said before here, we believe that we will see improvements here in the quarter to come. I think it is a really important milestone here, what we reported on the COEM outperformance, which was really strong here in the quarter. Still, the global OEMs is a bigger majority of our total sales, and some of our customers here that are significant had a negative mix impact on us this quarter, unfortunately. That was on the negative side here. We don’t see this as a major trend shift here. It’s a mixed effect that we see from quarter to quarter here.

I think the important takeaway here is that we see this strong growth development with the Chinese OEMs that is also growing their share of the total market.

Fredrik Westin: That sets us up for, I would say, good development in China over time.

Dan Levy: Okay. Thank you.

Operator: Given the time constraint, this concludes the question and answer session. I will now hand back to Mr. Mikael Bratt for closing remarks.

Mikael Bratt: Thank you very much, Ras. Before we conclude today’s call, I want to reaffirm our commitment to meeting our financial targets. We remain focused on cost efficiency, innovation, quality, sustainability, and mitigating tariffs. With ongoing market headwinds, we anticipate strong fourth quarter performance. Our fourth quarter call is scheduled for Friday, January 30, 2026. Thank you for your attention. Until next time, stay safe.

Operator: This concludes today’s conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

If you’re looking to put money to work in the market — say $1,000 — investing in some up-and-coming growth stocks could be a good route to take. Let’s look at two artificial intelligence (AI) stocks that could still be in the early days of a big ramp-up in growth.

Broadcom

Broadcom (AVGO -1.86%) has become the key architect for helping companies design custom AI chips, making it one of the most important players in the next phase of the AI infrastructure build-out. As companies look to increasingly loosen Nvidia‘s grip on the AI chip market, they are turning to Broadcom for help.

The company has already proved itself in its relationship with Alphabet, helping the cloud computing leader develop its highly successful tensor processing units (TPUs).

Broadcom expects just three of its established customers, which also include Meta Platforms and ByteDance, to represent a $60 billion to $90 billion opportunity by fiscal 2027. The midpoint of that estimate is more than the size of Broadcom’s entire current annual revenue base, which just shows you how big its custom-chip opportunity is.

The company recently announced a formal partnership with OpenAI to help develop and deploy 10 gigawatts of custom AI accelerators using Broadcom’s networking and Ethernet technology. The implications are enormous. A single gigawatt of data center capacity translates into tens of billions of dollars in hardware spending, meaning this partnership alone could represent a $100 billion annual opportunity in the coming years.

Broadcom has yet another new customer for its custom AI chips that ordered $10 billion worth of the semiconductors for next year. 

Now, with several of the world’s largest hyperscalers (companies that own huge data centers) as custom AI chip clients, Broadcom looks poised to see explosive growth in the coming years. This can be a good time to add shares before the company’s results start to really ramp up.

Image source: Getty Images

UiPath

Another company that has the potential to accelerate its growth in the coming years is UiPath (PATH -3.77%). The company built its name around robotic process automation (RPA), which uses software bots to handle repetitive business tasks, but it’s now moving into what it calls agentic automation.

The company has been busy forming partnerships that strengthen this strategy. It’s now working with Nvidia to integrate its Nemotron models and NIM microservices, which can accelerate AI deployment in industries where data security is paramount. It has also teamed up with Alphabet to use its Gemini models for voice-activated automation. 

However, its most interesting collaboration is with Snowflake, a data warehousing and analytics company that stores customers’ structured data. There has been a belief that AI would disrupt its business, given how well AI works with unstructured data, but companies like Palantir have actually shown that AI models work best when they have clean, organized data.

By connecting with Snowflake’s Cortex AI system, UiPath AI orchestration tools can give customers insights using their own data in real time. That is a powerful resource that could help make AI more actionable in the real world.

UiPath’s growth temporarily slowed as the AI frenzy took off and customers reevaluated their spending priorities, but the underlying business is improving again. Its annual recurring revenue (ARR) climbed 11% to $1.72 billion last quarter, and cloud-based ARR surged 25%, showing that customers are embracing the company’s newer offerings. Net revenue retention stabilized at 108%, and operating margins have expanded significantly after the company implemented cost cuts.

UiPath’s open approach, acting as the “Switzerland” of AI agents, should appeal to enterprises that don’t want to be tied to one AI ecosystem, and it represents a huge growth opportunity.

More than 450 customers are already building AI agents on its platform, and almost all new customers are adopting both its RPA and AI products together. That’s a strong sign the company’s AI expansion isn’t cannibalizing its core business but enhancing it.

Despite this progress, the market hasn’t caught on yet: The stock trades at a price-to-sales (P/S) multiple of only 5 times 2026 analyst estimates. If growth continues to reaccelerate, the stock’s upside could be substantial.

Artificial intelligence (AI) has become the megatrend of this decade and is fast transforming the enterprise landscape. According to Gartner, global AI spending will be nearly $1.5 trillion in calendar year 2025.

While the AI opportunity is massive, not every AI player can prove to be an exceptional business in the long run. Companies with proven technologies and well-established customer bases stand a better chance of sustaining high top-line and bottom-line growth rates in the coming years.

Here’s why Palantir Technologies (PLTR -0.31%) and Snowflake (SNOW 0.18%) are two companies that could deliver strong returns, turning disciplined investors into millionaires over the long run.

Image source: Getty Images.

Palantir

Palantir has evolved from a pure data analytics company to a full-stack AI enterprise platform. The company’s software solutions are now used in mission-critical operations by both government and commercial clients.

In the second quarter, the company’s revenue soared 48% year over year to over $1 billion. The U.S. continues to be the biggest market, with revenue growing 68% to $733 million. The company also closed a record $2.27 billion in total contract value, up 140% over the year-ago period.

A significant part of this growth is driven by the rapid enterprise adoption of the company’s Artificial Intelligence Platform (AIP). AIP combines large language model reasoning with the company’s proprietary ontology framework (used to relate physical assets to digital twins) to solve complex, real-time business challenges.

Palantir is also focused on helping clients scale through automation. The company has added new tools and features to AIP, such as AI Forward Deployed Engineer (software engineer) and AI Workbench, to automate application development tasks and develop, debug, and automate workflows.

The company has also introduced the Ontology-as-a-Code feature to enable clients to leverage ontology in their preferred integrated development environments, tools, and workflows.

Palantir’s shares are currently trading at a very aggressive valuation of over 123 times sales. Although not an ideal scenario, this premium reflects Wall Street’s confidence in the company’s future growth trajectory.

Analysts expect Palantir’s revenue to rise at a compound annual growth rate (CAGR) of 39.9% from $2.86 billion in fiscal 2024 to $11 billion in fiscal 2028. Adjusted earnings per share (EPS) are also expected to grow at a CAGR of 40.7% from $0.41 in fiscal 2024 to $1.61 in fiscal 2028. Hence, the valuation can continue to remain elevated for several more years.

Considering these factors, Palantir can prove to be a smart pick in 2025.

Snowflake

Snowflake is transitioning from a cloud data warehouse to an AI data cloud (unified platform comprising AI technologies, data, and applications) for enterprises.

In Q2 of fiscal 2026 (ended July 31, 2025), product revenue grew 32% year over year to $1.09 billion, while non-GAAP operating margin reached 11%. The company had $6.9 billion in remaining performance obligations (RPO) at the end of Q2, up 33% on a year-over-year basis. With a large base of renewing customers, contracted billings, and large deals in the pipeline, the company has strong revenue visibility for the next few years. Snowflake’s healthy net-revenue retention rate of 125% also demonstrates its success in cross-selling and upselling to existing clients.

AI has become the key growth engine, influencing almost half of all new customer wins in Q2. AI is also powering nearly 25% of the deployed use cases. Currently, over 6,100 accounts use Snowflake’s AI capabilities on a weekly basis for various activities such as data migrations, analytics, and workflow transformations.

Snowflake has further strengthened its position in enterprise AI with Snowflake Intelligence, which enables enterprises to interact directly with their data and also build intelligent agents. The company has introduced Cortex AI SQL, which enables users to leverage AI models directly within SQL databases. This removes the need to move data between applications and unifies analytics and AI.

The company is also committed to improving performance and efficiency. The company launched Gen2 data warehouses , which offer double the performance in extracting insights and managing data without increasing costs. The company’s new OpenFlow capability allows enterprises to bring unstructured, structured, batch, or real-time streaming data into the Snowflake platform.

All these AI-powered capabilities have accelerated the company’s customer acquisition pace. Snowflake added 533 new customers in Q2, including 15 Global 2000 companies. The company now is trading at 19.4 times sales, which is not cheap for a loss-making company. However, the premium seems justified when we consider its accelerating AI adoption, expanding customer base, and robust backlog.

Hence, the payoff in investing in Snowflake can be impressive despite its elevated valuation levels.

Stock prices continue to grow to the sky, and the S&P 500 index has set 28 record highs this year through the end of September.

Moreover, valuations continue to stretch. At 39.7, the Shiller Cyclically Adjusted (CAPE) Ratio is at its second highest level of the past century (higher than the eve of the Great Crash of 1929, though still a bit lower than the eve of the Internet bubble burst in 1999).

What should a prudent investor do in such a frothy market?

Investing in defensive stocks that are less vulnerable to market pullbacks, drawdowns, and corrections is one great idea. And here’s an even better idea: Buying reliable, stable defensive stocks that pay high dividends and reward investors with passive income.

Stability and income

So, what’s the best exchange-traded fund (ETF) to buy right now if you want exposure to defensive stocks that provide stable earnings and dividends? I like the Vanguard High Dividend Yield ETF (VYM) because it gives you a stake in a broad swath of high-yielding, stable, large-cap value stocks. Thus, you get safety and reliable passive income, and at a rock-bottom price.

The Vanguard High Dividend Yield ETF tracks the performance of the FTSE High Dividend Yield Index, which measures the return of a set of stocks characterized by high dividend yields. With total assets of $81.3 billion, the fund currently holds 579 stocks. Its top five holdings are:

• Broadcom, which accounts for 6.7% of the fund
• JPMorgan Chase, 4.1%
• ExxonMobil, 2.4%
• Johnson & Johnson, 2.1%
• Walmart, 2.1%

Such big, safe companies — ones that we would expect to be around for the long haul — are typical of the fund’s holdings. And it avoids risky and distressed firms.

Other than chipmaker Broadcom, no one stock currently accounts for more than 5% of the ETF, which makes it highly diversified. It’s also diversified among sectors. Its biggest holding by sector is financials, with about 22% of its assets in that industry. It also has large positions in consumer discretionary, healthcare, industrials, and technology, among a few other sectors.

The fund’s current yield is a very respectable 2.49%, about 1.3 percentage points above that of the S&P 500. The annual fee is a minuscule 0.06%, which is far lower than the 0.87% average for similar funds. The ETF is up about 10.4% year to date, which is solid given the income it produces.

Not so boring

Investors who think dividends are boring should think again. From 1940 to 2024, dividend income contributed 34% of the total return of the S&P 500, according to Hartford Funds.

Source: Getty Images.

That contribution varies a lot by decade. Dividends contribute a larger share of the total market return when the stock market is rising slowly, and a smaller share when it’s soaring. That makes sense. Companies with higher-yielding stocks tend to be large and slower-growing, just what you want to own in a challenging market environment.

Yes, there are stocks with much higher yields than those in the Vanguard High Dividend Yield ETF. But that’s by design, too. The fund avoids stocks with deteriorating fundamentals and declining prices, limiting its exposure to risky companies.

Best of all — considering the bubbly nature of the current stock market — this dividend ETF outperforms in difficult markets. It beat similar funds during the COVID-19 sell-off of early 2020 and outperformed other funds in its category by 7 percentage points in 2022, when the S&P 500 fell more than 19%.

The Vanguard High Dividend Yield ETF provides a steady, safer approach to higher-yielding stocks, and reliable passive income. Such an approach is beginning to look very attractive to many investors.

After it dipped nearly 4% lower last week, shares of fuel cell specialist Bloom Energy (BE -1.16%) reversed their downward trajectory and shot into the stratosphere this week. In addition to news that the company would help support the artificial intelligence (AI) industry, two analysts’ increasingly bullish outlook on Bloom Energy stock provided Main Street investors with more reasons to bid Bloom stock higher.

According to data provided by S&P Global Market Intelligence, shares of Bloom Energy had soared 32.5% from the end of trading last Friday through the close of Thursday’s trading session.

Image source: Getty Images.

The details of the recent deal

On Monday, Bloom Energy announced Brookfield Asset Management (BAM -3.63%) will make an investment of up to $5 billion to deploy Bloom’s fuel cell technology to support AI infrastructure. Exploring the development of AI factories located around the world, the two companies expect to announce a European site that will demonstrate this capability before the end of 2025.

It didn’t take long before analysts started to wax bullish on Bloom stock after it announced the deal with Brookfield. The next day UBS analyst Manav Gupta hiked the price target on Bloom stock to $115 from $105 based on the potential of the Brookfield partnership, and BMO Capital lifted its price target to $97 from $33.

Has the time to buy Bloom Energy stock passed you by?

The market’s seemingly insatiable appetite for AI exposure touched on Bloom Energy this week, and shares are now trading at a lofty 131 times forward earnings. While the fuel cell specialist is arguably the most promising opportunity among its fuel cell peers, the stock’s steep valuation suggests that it may be better to watch it from the sidelines for the time being and wait for a pullback before clicking the buy button.

And with respect to the analysts’ price targets — take them with a grain of salt. Analysts often have shorter investing horizons than the multiyear holding periods serious investors tend to favor; therefore, they shouldn’t be a priority when investors form investing theses.

Nvidia (NVDA 1.04%) has hit it out of the park quarter after quarter when reporting earnings, but that hasn’t made investors blasé about the artificial intelligence (AI) giant’s next update. Instead, investors wait with just as much anticipation each time around — and even wonder if, this time, they’ll see a slowdown in what’s been a whirlwind growth story.

As investors count the days until the next report — and in this case, it’s set for Nov. 19 — they look for clues about Nvidia’s AI business, one that’s generated record revenue in recent years. Nvidia, as the world’s biggest AI chip designer, delivered $130 billion in revenue in the latest fiscal year — that’s compared to $27 billion just two years earlier.

Now, one particular clue — and one investors truly can count on — comes from Taiwan Semiconductor Manufacturing (TSM -1.68%), a key Nvidia partner. TSMC, the world’s largest chip manufacturer, just announced big news for Nvidia stockholders. 

Image source: Getty Images.

How Nvidia and TSMC work together

Before we get to this fantastic news, though, we’ll take a quick look at Nvidia’s business and how the company works with TSMC. Nvidia for many years built its business around designing chips for the gaming market, but as AI surfaced as a growth opportunity, the company turned its attention there. And, as they say, the rest is history.

Today, Nvidia dominates this market with its high-powered chips as well as related products and services from enterprise software to networking systems. This has helped earnings and the stock price soar — Nvidia shares have climbed more than 1,100% over the past five years.

It’s important to note that though Nvidia is a chip designer, it’s not a chipmaker. Nvidia doesn’t actually manufacture its AI chips, known as graphics processing units (GPUs), and instead turns to TSMC for that job. TSMC has more than 500 customers across segments of the market, including the world’s chip leaders — from Nvidia to Broadcom and Advanced Micro Devices.

A deep look at the industry

On top of this, since the actual production of advanced chips becomes more and more complex with each chip innovation, TSMC starts work with customers two to three years prior to a new project. “Therefore, we probably get the deepest and widest look possible in the industry,” CEO C.C. Wei said during the company’s earnings call this week.

All of this means TSMC has a very clear picture of what’s happening in today’s AI market and what lies ahead. And this brings me to the news the company delivered this week — news that’s a big deal for Nvidia stockholders.

TSMC reported a 39% increase in profit and a 30% increase in revenue in the recent quarter, beating analysts’ estimates. Importantly, Wei said TSMC continues to see a “strong outlook” from customers and “received very strong signals from our customers’ customers. … Our conviction in the AI megatrend is strengthening.” Wei added that semiconductor demand “will continue to be very fundamental.”

Confirming the trend

All of this is incredible news for Nvidia’s shareholders as it confirms the trends the chip designer has spoken of in recent quarters and its prediction for growth in demand. In Nvidia’s most recent earnings report, back in August, CEO Jensen Huang predicted that AI infrastructure spending may jump to $4 trillion by 2030. TSMC’s report this past week offers us reason to be optimistic about that possibility and suggests that Nvidia is already starting to reap the rewards.

As customers seek GPUs, chip designers must turn to TSMC for production — and it’s likely that TSMC’s revenue gains reflect demand for Nvidia’s chips since Nvidia is the market leader.

All of this means there’s reason for investors to be optimistic about Nvidia’s upcoming earnings report and the messages it will deliver regarding future demand for its GPUs. That’s incredible news for Nvidia stockholders — and makes the stock a great one to buy and hold today.

One of the first investors to buy Nvidia (NVDA 1.04%) for the artificial intelligence (AI) boom was Stanley Druckenmiller at his Duquesne Family Office investment fund. At the end of 2023, it was one of his largest positions, a year where the stock more than tripled for investors, putting it on the path to become the largest company in the world by market capitalization.

Then, in 2024, Druckenmiller began to sell down his stake in Nvidia. By the end of last year, he had completely exited his position. What has he been buying instead? Last quarter, Duquesne bought two other trillion-dollar AI stocks: Taiwan Semiconductor Manufacturing (TSM -1.68%) and Microsoft (MSFT -0.43%).

Let’s see whether you should follow Druckenmiller and buy these two stocks for your portfolio today.

Image source: Nvidia.

Nvidia’s semiconductor supplier

Some readers may already know this, but Nvidia does not manufacture its advanced computer chips itself. It only designs them. The key manufacturing supplier of Nvidia chips is Taiwan Semiconductor Manufacturing, or TSMC for short. TSMC only makes computer chips for third parties and is known as a semiconductor foundry. These include Nvidia, but also the likes of Apple, Broadcom, and other technology giants.

With the insatiable demand for computer chips from the growing AI market, TSMC has been doing quite well in recent quarters. Last quarter, revenue grew 44.4% year over year to $30 billion. Not only is TSMC one of the largest businesses in the world, but one of the fastest growing.

As one of the only companies that can manufacture advanced semiconductors at scale, TSMC has been able to sell its computer chips to customers like Nvidia with fat profit margins. Last quarter, operating margin was close to 50%, which is unheard of for a manufacturing business.

At today’s stock price, TSMC trades at a price-to-earnings ratio (P/E) of 34. While this is slightly expensive, it is much better than Nvidia’s P/E ratio of 51. When you consider that both stocks will benefit from the growing demand for AI computer chips, it is no surprise that Duquesne sold its stake in Nvidia and owns TSMC today instead.

Microsoft’s opportunity in AI

Microsoft is a large customer of Nvidia as the company accelerates its buildout of cloud computing data center infrastructure to power the AI revolution. It has a relationship with OpenAI, the leading private AI company that is spending hundreds of billions of dollars on infrastructure. In 2025 alone, Microsoft is planning to spend $80 billion on capital expenditures to help catch up with AI demand.

Its cloud revenue is benefiting massively from the growth in AI. Its Azure cloud computing division grew revenue 34% year over year last quarter to $75 billion, making it the second-largest cloud business in the world apart from Amazon Web Services (AWS). Overall revenue is growing well due to Microsoft’s diversified assets in personal computing, Office 365 subscriptions, and other services such as LinkedIn. Revenue was up 17% year over year last quarter, with operating income up 22% (both in constant currency). Expanding operating margins to 45% makes Microsoft one of the most profitable businesses in the world.

Like TSMC, Microsoft trades at a much cheaper P/E ratio than Nvidia, at 37.5 as of this writing. With steady growth, margin expansion, and a clear line of new demand for Azure for AI solutions, Microsoft looks like a solid buy-and-hold stock for investors over the next decade and beyond.

At the end of the second quarter, TSMC was 4.3% of the Duquesne stock portfolio, according to its 13F filing, increasing its position by 27% more shares in the period. Microsoft was a completely new buy for the fund, but it is already a 2.5% position. Both stocks have done well throughout the second and third quarters, but can still be good long-term buys for investors looking for inspiration from super investors like Druckenmiller.

A lot of people start collecting Social Security specifically because they’ve stopped working, or when they’re ready to stop. But you should know that if you wish to work while collecting Social Security, that option exists.

However, there are rules you should know in the context of working while on Social Security. Here’s a rundown.

Image source: Getty Images.

Working while on Social Security has its advantages

You may find that your Social Security benefits aren’t enough to cover your retirement expenses in full. If you don’t have an IRA or 401(k) to supplement with, then you may be inclined to work in some capacity to make up the difference.

Once you reach full retirement age, which is 67 for people born in 1960 or later, you don’t have to worry about having Social Security benefits withheld for working, regardless of what you earn. But if you’re collecting Social Security before having reached full retirement age, you’ll be subject to an earnings test whose limits change annually.

This year, for example, you can earn up to $23,400 without having any Social Security withheld if you’re under full retirement age. Beyond that point, you’ll have $1 in Social Security withheld per $2 of income.

The earnings-test limit is much higher if you’re reaching full retirement age at some point in 2025. In that case, it’s $62,160. And beyond that point, you’ll have $1 in Social Security withheld per $3 of income.

If you’re under full retirement age but also earn less than the earnings-test limit, you can enjoy a nice supplement to your income without any negative impact. And even if you have benefits withheld for exceeding the earnings-test limit, you’ll get that money back eventually.

Once you reach full retirement age, your monthly benefits will be recalculated and boosted to make up for withheld Social Security earlier on. That could be a good thing, because if you get used to living on less and your monthly benefits go up substantially, it could feel like a bonus of sorts.

You may get larger monthly benefits for another reason

In addition to putting more money in your pocket, working while on Social Security could set you up for larger benefits down the line. The formula used to calculate your benefits accounts for your 35 highest-paid years of earnings while adjusting earlier wages for inflation.

If you earn a lot while collecting Social Security, you might replace a year of lower income with a higher income. That could, in turn, lead to larger benefit payments.

Let’s say you worked for 35 years, but for three of those years, you only worked part-time and earned very little. If you work part-time while on Social Security and bring in $22,000 over the course of the year, you’ll be below the earnings-test limit.

But $22,000 may also be a lot more than what you earned during one of your years of part-time work, even with those earlier wages adjusted for inflation. So you may find that working leads to a more generous monthly payday for life once the Social Security Administration is able to factor your most recent wages into your benefit formula.

Know the rules

You may have heard that working while on Social Security is not a good idea because of the earnings-test limit. Or, you may be under the impression that if you’re getting monthly benefits, you’re barred from working, period.

It’s important to understand the rules of working while collecting Social Security so you’re able to supplement your income as you please. And you may find that holding down a job while receiving benefits gives you more money not just from those wages, but in the form of larger monthly Social Security checks later on.

Over the next few weeks, many of America’s largest technology companies will report their operating results for the quarter ended Sept. 30. They will provide investors with a valuable update on their progress in the artificial intelligence (AI) race, which is driving an enormous amount of value right now.

Sept. 30 marked the end of Microsoft‘s (MSFT -0.43%) fiscal 2026 first quarter, and it is scheduled to report those results on Oct. 29. The company’s Azure cloud computing platform and its Copilot virtual assistant will be key points of focus for Wall Street because they are at the center of the company’s AI strategy.

Microsoft stock has already climbed 25% year to date. Is it still a buy ahead of the Oct. 29 earnings report?

Keep an eye on Copilot adoption

Microsoft launched its Copilot virtual assistant in early 2023. It was created using a combination of the company’s own AI models and those developed by its longtime partner OpenAI. The chatbot can be used for free in some of Microsoft’s flagship software products like Windows, Edge, and Bing, but it’s also available as a paid add-on for enterprise products like the 365 productivity suite.

Copilot can rapidly generate content in applications like Word and PowerPoint, autonomously transcribe meetings in Teams, and help users craft email replies in Outlook, so it has the potential to significantly increase productivity for enterprises. Microsoft says organizations around the world pay for over 400 million licenses for 365, all of which are candidates for the paid Copilot add-on, so the AI assistant could generate billions of dollars in recurring revenue for the company over the long term.

During the fiscal 2025 fourth quarter (ended June 30), Microsoft said several large customers expanded their Copilot adoption through 365. Barclays, for example, bought 100,000 licenses for its employees after running an initial test with 15,000, which implies a high degree of satisfaction with the assistant’s capabilities. This is the kind of information investors should look out for on Oct. 29, because it could be a predictor of future revenue.

But 365 isn’t Microsoft’s only enterprise opportunity when it comes to Copilot. There is Copilot Dragon, an innovative healthcare solution that autonomously documents millions of doctor-patient interactions, saving clinicians valuable time. Then there is Copilot Studio, a platform that allows businesses to create custom AI agents to automate workflows in any application, even those outside Microsoft’s ecosystem.

The most important segment to watch on Oct. 29

Microsoft’s Azure cloud platform operates hundreds of data centers spread across dozens of different regions around the world. They are fitted with the most advanced chips from suppliers like Nvidia and Advanced Micro Devices, and businesses rent the computing capacity from Azure to power their AI training and AI inference workloads.

Microsoft also launched Azure AI Foundry earlier this year, which ties many of the cloud platform’s AI services together to form a holistic solution for enterprises. It can be used to turn raw data into documents, build AI chat applications, deploy AI software, perform multimodal content processing, and more. It also offers access to the latest large language models (LLMs) from third parties like OpenAI to accelerate AI development.

Azure is regularly the fastest-growing part of Microsoft’s entire business, but it surprised even the most bullish analysts during the fiscal 2025 fourth quarter when its revenue soared by a whopping 39% year over year. It was the fastest growth rate in three years, and it marked a significant acceleration from the 33% growth Azure generated in the third quarter just three months earlier.

Demand for data center capacity and Foundry were the key drivers of the incredible result, so this is where investors should focus most of their attention on Oct. 29.

Should you buy Microsoft stock before Oct. 29?

Microsoft stock isn’t cheap right now. It’s trading at a price-to-earnings (P/E) ratio of 38.3, which is a 14% premium to its five-year average of 33.5. It’s also notably more expensive than the 33.3 P/E of the Nasdaq-100 index, which is home to many of Microsoft’s big-tech peers.

MSFT PE Ratio data by YCharts

As a result, investors who are looking for short-term gains over the next few months might be left disappointed. That doesn’t mean the stock is a bad buy ahead of Oct. 29, but investors who pull the trigger must be willing to hold it for the long term — preferably for three to five years — to maximize their chances of earning a positive return.

One single quarter is unlikely to shift Microsoft’s momentum in either direction, but as long as Copilot adoption continues to expand and Azure’s revenue growth maintains its recent momentum, investors will probably be glad this stock is in their portfolio.

You probably think of the money in your retirement accounts as yours, but if you have traditional IRAs or 401(k)s, it’s not that straightforward. You owe the IRS a cut of your savings, and at a certain point, it forces you to start taking required minimum distributions (RMDs). These are mandatory annual withdrawals that you must pay taxes on.

If you’re new to RMDs, they can seem a little intimidating. Failing to withdraw the required amount results in a steep 25% tax penalty on the amount you should’ve withdrawn, so it’s important to know how to calculate yours correctly. Let’s look at the example of a retirement account with a $500,000 balance.

Image source: Getty Images.

Three situations where you don’t have to take an RMD

You won’t have to take an RMD from your retirement account if any of the following are true:

• You’re under age 73: RMDs begin in the year you turn 73. If you turn 73 in 2025, you technically have until April 1, 2026 to take your first RMD. In all subsequent years, you must take RMDs no later than Dec. 31 of that year.
• It’s a Roth account: You fund Roth accounts with after-tax dollars, so you can enjoy tax-free withdrawals in retirement. Because of this, the government has no incentive to force you to take money out each year.
• The account is associated with your current employer: If you’re still working, you can delay RMDs from your current employer’s retirement plan until the year after the year you retire. However, you still have to take RMDs from old 401(k)s and traditional IRAs,if you have any.

If none of these things apply to you, then you will need to take an RMD. Fortunately, they’re not too difficult to calculate.

How to calculate your RMD on a $500,000 account

You calculate your RMD using the balance as of Dec. 31 of the previous year — Dec. 31, 2024 for your 2025 RMD. If you don’t know what your balance was at that time, you may need to look it up or speak to your plan administrator.

Once you know the amount, all you need to do is divide that by the distribution period next to your age in the IRS’ Uniform Lifetime Table. The result is your RMD.

So, for example, if you had $500,000 in your 401(k) as of Dec. 31, 2024 and you turned 73 in 2025, your RMD would be $500,000 divided by 27.4 — the distribution period for 73-year-olds. That comes out to about $18,248.

You’re free to take out more than this if you’d like. But this is the minimum amount you must withdraw in order to avoid the 25% penalty.

What if you don’t want to take your RMD?

Avoiding mandatory withdrawals generally isn’t worth it. The 25% penalty will likely cost you more than what you would’ve paid in income taxes if you’d just taken the RMD as scheduled.

That said, sometimes you may not want to deal with the extra taxes an RMD can bring. In that case, consider making a qualifying charitable distribution (QCD). This is where you ask your plan administrator to send an amount equal to your RMD or a portion of it to a qualifying tax-exempt organization.

The money must go directly to the charity. If the plan administrator distributes it to you first, it does not count, even if you give it all away to charitable causes. Done properly, the IRS won’t tax you on this retirement account withdrawal, and it’ll consider your RMD satisfied for the year.

The maximum QCD you can make in 2025 is $108,000. This should be more than enough for most people.

You may have already spent an amount equal to your RMD on living expenses this year. In that case, you’re in the clear until next year. Check with your plan administrator if you’re unsure how much you’ve already withdrawn from your accounts in 2025. If you come up a little short, be sure to make some more withdrawals in the next few weeks.

I love to collect dividend income. It provides me with more cash to invest each month and a growing level of financial freedom. My goal is to eventually generate enough passive income from dividends and other sources to cover my basic living expenses.

To support my income strategy, I focus on buying high-yielding dividend stocks. Two companies in particular, Brookfield Infrastructure (BIPC -2.38%) (BIP -1.62%) and W.P. Carey (WPC), have consistently stood out. Here’s why I can’t stop buying these income stocks.

Image source: Getty Images.

A high-octane dividend growth stock

Brookfield Infrastructure currently yields nearly 4%, more than triple the S&P 500’s dividend yield (1.2%). The global infrastructure operator supports its high-yielding payout with very stable cash flows. Long-term contracts and government-regulated rate structures account for around 85% of its annual funds from operations (FFO). Most of those frameworks have no volume or price exposure (75%), while another large portion of its cash flow (20%) comes from rate-regulated structures that only have volume exposure tied to changes in the global economy. The bulk of these arrangements also either index its FFO to inflation (70%) or protect it from the impact of inflation (15%).

The company pays out 60% to 70% of its very resilient cash flow in dividends. That gives it a comfortable cushion while allowing it to retain a meaningful amount of cash to invest in expansion projects. Brookfield also has a strong investment-grade balance sheet. Additionally, the company routinely recycles capital by selling mature assets to invest in higher-returning opportunities.

Brookfield has grown its FFO per share at a 14% annual rate since its inception in 2008, supporting a 9% compound annual dividend growth rate. While its growth has slowed in recent years due to headwinds from interest rates and foreign exchange fluctuations, a reacceleration appears to be ahead. The company believes that a combination of organic growth driven by inflationary rate increases, volume growth as the economy expands, and expansion projects will drive robust FFO per share growth in the coming years. Additionally, it expects to get a boost from its value-enhancing capital recycling strategy. These catalysts should combine to drive more than 10% annual FFO per share growth.

The company’s strong financial profile and robust growth prospects easily support its plan to increase its high-yielding payout at a 5% to 9% annual rate. Brookfield has increased its payout in all 16 years since it went public.

Rebuilt on an even stronger foundation

W.P. Carey has a 5.4% dividend yield. The real estate investment trust (REIT) owns a well-diversified portfolio of operationally critical real estate across North America and Europe. It focuses on investing in single-tenant industrial, warehouse, retail, and other properties secured by long-term net leases featuring built-in rental escalation clauses. Those leases provide it with very stable and steadily rising rental income.

The REIT has spent the past few years reshaping its portfolio. It accelerated its exit from the office sector in late 2023 by spinning off and selling its remaining properties. W.P. Carey has also been selling off some of its self-storage properties, particularly those not secured by net leases. It has been recycling that capital into properties with better long-term demand drivers, such as industrial real estate.

W.P. Carey’s strategy should enable it to grow its adjusted FFO at a higher rate in the future. Its portfolio is delivering healthy same-store rent growth (2.3% year-over-year in the second quarter). Meanwhile, its investments to expand its portfolio are driving incremental FFO per share growth. W.P. Carey is on track to grow its adjusted FFO per share by 4.5% at the mid-point of its guidance range this year.

That growing income is allowing the REIT to increase its dividend. It has raised its payment every quarter since resetting the payout level in late 2023 when it exited the office sector, including a 4% increase over the past 12 months. With a strong portfolio and balance sheet, W.P. Carey has the financial flexibility to continue growing its portfolio, FFO, and dividend in the coming years.

High-quality, high-yielding dividend stocks

Brookfield Infrastructure and W.P. Carey stand out for their stable and growing cash flows, as well as high-yield dividends. Brookfield offers inflation-protected cash flows that minimize risk, while W.P. Carey generates reliable rental income from long-term leases. With lots of income and growth ahead, I just can’t stop buying these high-quality, high-yielding dividend stocks.

According to data compiled by S&P Global Market Intelligence, Wells Fargo (WFC -2.93%) stock was up by more than 8% week to date as of Thursday night. That was hardly a surprise, as the company delivered quarterly results that beat analyst estimates and pleased investors.

A satisfying third quarter

On Tuesday, Wells Fargo — one of the so-called big four U.S. banks — took the wraps off its third quarter. For the period, total revenue came in at over $21.4 billion, representing an improvement of 5% over the same quarter of 2024.

Image source: Getty Images.

The company’s generally accepted accounting principles (GAAP) net income saw a healthier rise, growing by 9% year over year to almost $5.6 billion. On a per-share basis, that profitability stood at $1.66.

As for traditional banking metrics, average loans crept up by 2% to just under $929 billion. Average deposits, however, declined marginally to almost $1.34 trillion.

The two headline numbers comfortably exceeded the consensus analyst estimates. Prognosticators tracking Wells Fargo stock were collectively anticipating slightly more than $21.1 for total revenue and $1.55 per share for profitability.

Multiple revenue streams

In its earnings release, Wells Fargo attributed its improvements mainly to a rise in fee-based income from both commercial and consumer operations. The bank also benefited from higher vehicle loan originations and an increase in total client assets for its wealth and investment management business.

A potential legal headache for consumer healthcare giant Kenvue (KVUE -13.50%) was causing pain for investors on Thursday. Such troubles tend to spook the market; hence the more than 13% sell-off of Kenvue across that trading session. The S&P 500 (^GSPC -0.63%), by comparison, did much better on the day with “only” a 0.6% decrease.

New lawsuit with old allegations

Until it was spun off into a separate company, Kenvue was part of sprawling pharmaceutical company Johnson & Johnson (JNJ 0.50%). The company has faced tens of thousands of lawsuits over its Johnson’s Baby Powder, a once talc-based product that is widely alleged to have caused various types of cancer.

Image source: Getty Images.

The first such lawsuit in the U.K. has been filed by a group of roughly 3,000 claimants, according to reporting from various media. It was submitted to the English High Court against both Kenvue and Johnson & Johnson.

The former company basically inherited Johnson & Johnson’s numerous consumer healthcare products, a portfolio that included Johnson’s Baby Powder. In 2020, the main ingredient in the now-controversial product was switched from talc to cornstarch.

Kenvue responds

Reporting on this development, Reuters wrote that Kenvue’s response was that it did not believe the court would find that the talc-based powder causes cancer, as the claimants allege.

Aerospace and defense company RTX (RTX -0.10%) didn’t really have a banner day on the market Thursday, but in a trading session when the S&P 500 index fell by 0.6%, the stock’s flat performance made it a winner. Investors were reacting to good news from one of RTX’s three core business divisions.

Up in the air

That division is aircraft engine specialist Pratt & Whitney, which this morning reported it had earned an important certification abroad.

Image source: Getty Images.

Specifically, Pratt Whitney’s GTF Advantage engine got the nod from the European Union Aviation Safety Agency (EASA). This follows similar certification from EASA’s American equivalent, the Federal Aviation Agency (FAA), and the company said it clears a path for the product to enter service next year.

The GTF Advantage is a next-generation engine for airliners that, according to its maker, delivers more thrust and boasts higher fuel efficiency than competing products currently on the market.

Big promises

In its press release divulging the happy news, Pratt & Whitney quoted its president of commercial engines, Rick Deurloo, as saying that the company’s new engine “will be a game-changer for operators.”

Despite the confidence, however, Pratt & Whitney did not provide any estimates as to how sales of the GTF Advantage will impact its fundamentals, or those of its parent RTX.

In this podcast, Motley Fool analyst Jason Moser and contributors Travis Hoium and Jon Quast discuss:

• How 2025 compares to 1999 and 2007.
• What they wish they had known in the past.
• Energy’s role in AI.

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

A full transcript is below.

This podcast was recorded on Oct. 10, 2025.

Travis Hoium: How does the market in 2025 fit into the history of the stock market? Motley Fool Money starts now.

Welcome to Motley Fool Money. I’m Travis Hoium joined today by Jon Quast and Jason Moser, and I think this is an important time in the market. Take a step back and look at a little bit of context in history. There are these decade long trends that we typically go through, and it seems like we’re either at the beginning or end of one of those with artificial intelligence and all of the companies that are going crazy right now. I want to get your guys’ thoughts on where we are. We all see the potential of artificial intelligence, but the Internet was a massive opportunity in 1999. Mobile was a huge opportunity in 2007. That didn’t stop the crashes that ensued. What historic parallels, Jason do you see in the market today that investors can learn from?

Jason Moser: Yeah well, I love this idea. I think there are a lot of parallels we can draw here. There are some similarities and I think there are some differences as well. You go back to for example, the buildout of the Internet back in 1999, the .com crash that ensued. I mean, there’s a lot of similarities from then to what’s going on today. There’s massive infrastructure buildout. It’s the foundation for what looks to be a new era of technology. It’s also accompanied by a lot of speculation in the markets. We’re seeing that in the form of a lot of nosebleed valuations. I mean, I’m not saying they’re all nosebleed valuations, but there is some data that shows that AI first companies today that are coming to market, are getting 20-40% premium valuations over their non AI driven types of companies. Then you’re also seeing some of the most speculative names are garnering valuations in the neighborhood of 200 times sales.

Travis Hoium: Some of them have gone parabolic just in the past few.

Jason Moser: Yeah, absolutely. I understand the enthusiasm, but there was an interesting interview with Orlando Bravo the other day on TV. He heads up the firm Toma Bravo which they specialize in SAS software and stuff like that. The question that was posed as it’s been posed to most of us is, are we in a bubble? He answered simply yes. I mean, you can’t have companies that are working on $50 million in annualized recurring revenue value to $10 billion, that just doesn’t work. It’s not sustainable. At some point, we will see that shift. But I do think there are some differences too. I mean, primarily, you look at the physical restraints of what was being built out back in 1999, that was laying all that optic cable. Physically difficult to do, but a little bit different than really the restraint today. Now we’re talking about power. We’re trying to figure out how to get the electricity, the power to really make all of this stuff run. I think funding is a little bit more realistic this time around just because so much of it is coming from the hyperscalers. Let’s put OpenAI aside here and look at the other companies, your Amazons, your Alphabets, your NVIDIAs of the world that are helping to fund a lot of this. When you have businesses that are that big with more reliable cash flows, I think the funding side of it seems to be a little bit less speculative than it was back then.

Travis Hoium: Do you think that has changed over the past, even the past few weeks with things like guaranteeing revenue? I think, you know, India did that with CR weave. You’re seeing more variable interest entities or they’re going by different names now, but it’s basically doing some of these financings off balance sheet. That’s what ultimately got Enron in trouble. That isn’t necessarily a parallel that we want to go down, but it’s one of those things where there are these small red flags that you can look throughout history and go, Okay, when you start to see this happen, you should perk up a little bit.

Jason Moser: I think you need to be asking the questions. I think it’s no accident that this week we really saw a lot of those maps circulating around that were showing the intertwinenss of all of these. It’s just a handful of companies that are really dictating the space and you want to put some numbers around it. I mean, this is what really makes me nervous. I think you look at Morgan Stanley research. They say that OpenAI itself, they make up more than $300 billion of this something like $880 billion total future contract value that’s tied to the spending with Microsoft, Oracle, and CR weave, among others. You think about that in the context of the fact that OpenAI, I mean, they just generated basically $13 billion annualized at the midpoint of 2025, and they’re losing money still hand over fist. Where that capital ultimately comes from I think, is a question that investors really need to be focused in on. It’s not to say that OpenAI won’t continue to grow, but that is a big Delta that they’re going to have to figure out a way to shore up.

Travis Hoium: Jon, how do you think about this in a more historical context? What things are you trying to learn from history that could maybe apply today?

Jon Quast: Well, I think historically, whenever you see something new and exciting, investors are wanting in on that and they’re not wanting to miss out. I’d say that applies to both retail investors and private equity investors. You can see that in a couple of fronts here that there are some companies, I think, that are preying on that, taking advantage of that, knowing that investors are willing to pay up for the excitement, the admission to the theme park. You look at the public markets, for example, look at special purpose acquisition companies.

Travis Hoium: These are SPACs. This is what was really popular in 2020 and 2021.

Jon Quast: Yeah, right before we had major, major pullback in so many of the companies out there. These are companies that don’t even have a business. They’re saying, give us money so we can go buy a business. Many of them came forward in 2020, 2021. There’s been a couple of years of a lull but now this year, we have 161 that have gone and filed so far this year, and the years not even over yet. That’s as much as basically the last three years combined. I’m not saying that they’re all bad opportunities. I’m not even saying that most, but I’m saying somewhere in there, the data is saying, yeah, somebody is taking advantage of a situation where investors are very excited and they’re willing to pay for a lottery ticket, essentially. The same thing in the private equity space, you look at the AI private companies out there starting to do perhaps some questionable things, maybe counting some one time deals as part of the calculation in their annual recurring revenue and doing that so that they can boost their valuations, and that increases the amount of funding that they’re able to get from these private investors. We would think that private investors are a little bit smarter than that. But again, I mean, we all have human psychology, and we don’t want to miss out on something that is truly transformative in artificial intelligence.

Travis Hoium: Jason, you brought up those images that are going around. There’s one from the FT, there’s one from Bloomberg, just show this web around OpenAI. One of the things that I think I learned in the 2008, 2009, downfall of the market and the recession that ensued was things just got really, really complicated when a lot of things didn’t need to be complicated. We started with mortgages, mortgage is a fairly straightforward financial instrument, but then you start turning it into 48 different products that you’re cutting into different pieces, and nobody knows where the risk is or who’s holding the risk. That’s what I get concerned about right now is, if AI is such a no brainer and it’s such a high return on investment, then why do we need all this complicated these complicated financial structures? Again, it’s just raising red flags to me. Let me put it this way because I think what we’re trying to do today is take a little bit of our knowledge and pass it on to everybody who’s listening. If you are going to go back, Jason, I’ll start with you, if you were going to go back and talk to yourself in 1999 or 2007, what would you tell yourself that you could maybe implement as an investor?

Jason Moser: Wow, yeah. I like that question a lot. I think if I look back to 1999, while I was investing at the time, I wasn’t a member of the Motley Fools. I think, first and foremost, and I’m being dead serious here, I would have told myself to get a subscription to the Motley Fool because from an educational perspective alone, I think that style of thinking, that style of investing and taking that longer term view is just invaluable. I’d also say, wow, it’s tempting. Steer clear of speculation. I think you’re right. One of the big problems back in 2007/8 was just how ununderstandable that web of financial instruments ultimately became. I think that was a result of greed primarily. But I also look at today and you’re talking about these special interest entities and whatnot. Money isn’t limitless and so I think they start to make it a little bit more complicated when they need to figure out ways to raise more money. That becomes a little bit more concerning as well. I’d say, for me, I’d steer clear speculation. These were stretches of time when some of the great businesses of our time went on sale. Stay focused on owning those high quality businesses, leave the speculating to those who think they probably know what they’re doing and maybe don’t necessarily actually know.

Travis Hoium: Jon, what do you think?

Jon Quast: So 1999, I wasn’t an investor yet, and so it didn’t really start for me until around the great recession.

Travis Hoium: You weren’t investing, but do you remember feeling the.com bubble and crash? Because I think that is an interesting until you actually have money in the market, it is kind of ah, this thing happens, but it doesn’t really affect me.

Jon Quast: Well, I would say absolutely not. I mean, just where we were in our little corner of North Carolina back in those days, I mean, man, we had dial up Internet. I mean, we weren’t even all that aware of what was going on. For me, the great recession was where I really began to take investing seriously. What I tell myself, besides what Jason already said was, I wish that I had just held on to my original vintage of stocks that I invested in. I know it’s 20 years later now, but I look at some of the ones that I had at the time. Buffalo Wild Wings, which is no longer publicly traded, but if I’d just held onto Buffalo Wild Wings from the time I invested until the time that it went private, it was a 10 bagger or more, and I sold after it doubled. I owned Marvel back before Disney acquired it and sold around the time of the announcement. I wish I had just held onto Disney all that time. McDonald’s was one of the first stocks I ever bought. Yeah, maybe that’s not the flashiest thing, but it’s up over 1,000% with dividends. I know some of the listeners are saying, hey, well, that’s 20 years ago, but let me tell you something. For me, it’s 20 minutes. I just started investing. Time goes by so fast. At the time you say, invest for three years, invest for five years. How could you ever? Twenty years is a heartbeat. Man, I wish I could just go back and say, hang on. Don’t try to get cute. Don’t try to buy and sell, trade, all this. Just buy and hold.

Travis Hoium: Yeah, Jon, the lessons that I have learned more than anything is not selling to give you an idea of what I owned in those days that I sold Chipotle, Apple, these are Las Vegas Sands. I remember buying for $2 a share. I think that was a 20 bagger over the next couple of years that I sold too early. Yeah, owning those companies that aren’t going anywhere that can survive any downturn, I would also say start paying attention to balance sheets. Because if companies are going to not survive, it’s not going to be the revenue drops a little bit. It’s going to be because there’s more risk on the balance sheet than they can handle. Something to keep in mind. When we come back, we are going to talk more about this buildout and where there could be opportunities you’re listening to Motley Fool money.

Come back to Motley Fool Money. One of the big topics of the AI buildout has been energy, and this has gotten a lot more attention over the past couple of months. Every hyperscalar, every Neo Cloud is looking for basically as much energy as they can get. Some of them have made deals with Bitcoin miners. I think that’s an interesting play here. Bitcoin Miners spent a lot of time building out the energy they need to run their mining equipment. Now we’re moving that to AI. Jon, where are the opportunities for investors in energy or at least what should we be keeping an eye at?

Jon Quast: Well, I think that nuclear power is big trend and I know that people have been hearing about it. I just think it’s going to be a lot of emphasis put there and even the emphasis that we put there isn’t going to be enough. You look at what OpenAI is reportedly wanting. They’re reportedly wanting 250 gigawatts of electricity by 2033, just for running their AI data centers. That’s just one company. President Trump earlier this year, signed an executive order to quadruple the country’s nuclear power. It will add basically 300 gigawatts of nuclear power. You look at that,250 is what OpenAI wants. We’re saying, we’ll add 300 gigawatts of nuclear power. Basically, they’ll take all of that.

Jason Moser: Doesn’t seem like a lot of wiggle room there, Jon.

Jon Quast: Exactly. Here’s the thing. The order is by 2050 to have that much extra power. President Trump is saying, we’re going to add 300 gigawatts. Give us 25 years. OpenAI is like, we need it now and so does every other company that’s doing what OpenAI is doing. I just think we’re going to have a heyday for nuclear, but even if we do, it’s still not going to be enough.

Travis Hoium: I want to put some numbers to this. The EIA, Energy Information Administration, which is a phenomenal source for energy information because they pull all the prices, all the capacity production, all that stuff. Between 2024 and 2028 in the US, there is a planned about 200 gigawatts of additions. About half of that, over half of that is solar, so an intermittent energy source. You have to consider that the capacity factor of solar, meaning the amount of time that it produces energy on an average day is about 20, 25% of the time. We’re not anywhere near hitting those numbers in what is planned, and power plants don’t go up. Even a solar plant, which can be built relatively quickly, you’re still talking many months, in some cases, years. All that said, Jason, where are you looking for opportunities today?

Jason Moser: It definitely feels like we’re going to need all we can get. It’s all hands on deck. I think the key is going to be focusing on every resource available. I think in regard to AI specifically and the capabilities that it’s driving, I think the overwhelming demand is going to be on those reliable or firm energy sources. The stuff that’s on 24/7 that’s easily distributable. Renewables are one thing. But I think for AI specific stuff, we’re going to be looking at nuclear, natural gas and hydro electric primarily. We saw Google earlier in the year made a deal to provide some early stage capital for elemental power to prepare some nuclear sites here in the US. I think those were those small modular reactors. The other thing to think about longer term and I’m talking about longer term, Travis, but think a decade out. There was an interview with Jeff Bezos this week that I was pretty, I was fascinated by because I actually could totally see this happening. He was talking about data centers in space. Essentially.

Travis Hoium: It sounds crazy.

Jason Moser: It sounds crazy. It does. It sounds like. But if you think about it, they’re already trying. They’re already in the process of trying to figure out how to make this work. Now, that solves two key problems. You get the limitless resource of solar up in space and you’ve solved your.

Travis Hoium: Suddenly, that becomes a base source of energy as opposed to variable.

Jason Moser: You solve your cooling problems as well. It knocks out you kill two birds with one stone, so to speak. I think that’s pretty interesting to think about just further out. Just keep an eye on that. I don’t think that’s high in the sky stuff. I think that’s actually pretty legit. Beyond that, I looked to other companies in the value chain that enable SMRT usage and monitoring. The company I’ve talked about before called Itron that does that. They help their customers safely and securely monitor that critical infrastructure and power and water. You can look beyond the providers and look to those value chain adders as well.

Travis Hoium: Do you think that the rise in electricity prices which again, is getting more attention this year, I’ve noticed it with my electricity bill Jason, is that a pending problem in the US because if AI is what’s raising the costs for the average person, seems like an issue.

Jason Moser: Consumers will not like it. I can guarantee you that. I mean, I noticed the power bill difference when the winter hits here in Northern Virginia, and it basically doubles. If we see things going beyond just your typical seasonality, I think that’s going to be a real problem.

Travis Hoium: Yeah, that’s something to keep an eye on because regulators do play a pretty big role in this, who’s gonna get the electricity? What are people paying? That’s not just an economics process, although the economics could help with justifying some of these investments too, something else to keep in mind is that, you know, energy costs are important, and if prices are going up, people are gonna put more money into the ground. When we come back, we’re going to see how well Jason and Jon know their history of investing you’re listening to Motley Fool money.

Welcome back to Motley Fool Money. I want to know how well Jason and Jon know their market history. I’m going to ask you guys a few questions and see who knows the answer. Jon, I’ll have you go first here. What was the date of the 1987 crash? As a bonus, how much did the Dow Jones Industrial average drop on that day?

Jon Quast: Oh, and I assume that you’re wanting more than the year 1987, yeah?

Travis Hoium: Yeah, I would like you can give me the day of the week. Any information is.

Jon Quast: Well, it was on a Monday.

Travis Hoium: What color was this Monday, Jon.

Jon Quast: Well, there we go. A very black Monday. I would think it’s in October, but I don’t remember.

Travis Hoium: Jason, do you know the date?

Jason Moser: I actually do know this one. It’s October 19th.

Travis Hoium: 1987 and how much did the Dow drop?

Jason Moser: Do we have a little wiggle room here? I know it was 20%. It was a little bit more than 20%, but I don’t think it was 25%. It was somewhere in the middle between 20 and 25%.

Travis Hoium: Oh, that’s good. Jon. Do you have an answer.

Jon Quast: I was going to say 12.

Travis Hoium: Okay, 22.6% drop for the Dow Jones Industrial average. But the other thing that’s interesting with that historically is the Dow was what really got all the attention back then. It was not the S&P 500. We don’t talk much about the Dow anymore, but it was those 30 stocks. That’s what was reported on the nightly news. That’s the numbers that everybody knew is, what was the Dow doing?

Jason Moser: Yeah, and it’s interesting to think about the difference between the Dow and the S&P. We talk about, they definitely tried to modernize the Dow to a degree. It’s a little bit more up to speed now. But there’s also that difference between the stock price weighted index, the Dow Jones.

Travis Hoium: Do you want to explain that? Because that is a really weird thing about the Dow.

Jason Moser: Yeah, essentially, I mean, you’re just looking at one index and the Dow where it’s basically measured by the value of the stock price itself.

Travis Hoium: The number, so if you have $100 stock, it has a 10X weighting of a stock that has a $10 stock.

Jason Moser: Whereas the S&P, it’s market capitalization weighted. You’re actually talking about how heavy the whole company is. Stock price can be a function of anything. I mean, stock splits and whatnot can change it. It is just interesting to see that difference there and how that ultimately plays out in the way those indices perform.

Travis Hoium: Yeah, and back then that was a big reason that a lot of stocks typically were kept with stock splits and things like that, between somewhere around $30 and $100 per share. We get 100, you would expect a stock split to come. We don’t really think about that anymore because we have fractional shares and all that kind. That stuff didn’t exist.

Jason Moser: Yeah, I think didn’t memory serves, I think when Apple joined the Dow and didn’t it actually split its stock in order to be able to facilitate that membership? I feel like that might have happened.

Travis Hoium: That is a historical question I do not have the answer to. Speaking of big tech though, and maybe I’m giving things away here, what was the most valuable company in the world on January 1st, 2000? Jason, I’ll have you go first here. This is .com bubo. Lots of options.

Jason Moser: There are a lot of options. Was it global crossing? I don’t know. Honestly, just I feel like that’s a Jon.

Jon Quast: I would guess Cisco.

Travis Hoium: That would have been my guess. Cisco was the most valuable company in the world for a short period of time, but that was in March of 2000 at the turn of the century to the millennium, it was Microsoft. That was really most valuable company in the world. Interesting, parallel to where we are today, Microsoft was the most valuable company in the world. That is still one of the most valuable companies in the world. But if you would have invested in Microsoft at the beginning of 2000 and held it for the next 15 years, you would have basically the same amount of money.

Jason Moser: I was going to say the Balmer years didn’t treat shareholders very well.

Travis Hoium: Yeah, and so there’s a couple of things. I mean, their business actually did fine during the 2000, but the end of the ’90s, early 2000s, the price that you were paying was extremely high, and so multiple compression, meaning the price to earnings multiple or the price to sales multiple was going down over that period of time. Instead of multiples being a tailwind, like they’ve been for a lot of stocks over the past couple of years, it was a headwind for Microsoft. Again, just something to think about as we think about the market today. Pets.com gets a lot of attention in the .com bubble. Do you know when pets.com IPOed, and what its highest market cap was before falling apart. Jon, I will have you go first. When was the IPO, and what’s the highest market cap?

Jon Quast: Oh, how should I know? I mean, you want more than the year.

Travis Hoium: Actually, you might not get the year.

Jon Quast: I know. I mean, I feel like this is a high bar. I’m gonna go with June 12th, 1995, and I’ll say peak valuation was 50 billion.

Travis Hoium: See, Jason, I’ll give you a guess here, but these numbers surprise me.

Jason Moser: Yeah, the IPO, I don’t know, so I’m just going to guess March 1997, valuation wise, I know given the valuations that we see today, you would want to say something like 50 billion or I get that. But I think actually it was really especially at that time. This was even big at that time. I think it was something like 450 million, $500 million.

Travis Hoium: Wow. You guys are both way off for the timing. Their IPO was February of 2000. Way later than I would have guessed. But, Jason, you’re almost exactly right. $400 million was their top market what I think is interesting about that is, that is the name that we all remember from the .com bubble. But it wasn’t all that big of a company.

Jason Moser: No. Well, I mean, at the time it was. I mean, consider.

Travis Hoium: But you’re looking at I think today’s prices, that would be still less than billion dollar.

Jon Quast: I literally 100 times more than that.

Jason Moser: They had obviously a very short lived campaign as a publicly traded company. But yeah, I mean, that was like the quintessential Internet stock. I mean, just advertising at the Yin Yang, found a clever brand with that little sock puppet puppy, and they were just selling stuff on the Internet, like, this is the way we do it and just making no money in the process. But it’s interesting how we gave Amazon so much leeway to build out that concept, and yet your pets.coms of the world just never really stood a chance.

Travis Hoium: The lesson that I take from that one because you’re right. Amazon has become, obviously a household name everywhere. But if you would have just waited. If you would have just said, I’m not going to invest. The Internet, I think, is a huge thing. But 1999 I’m just going to say, you know what? I’m going to let things play out a little bit and you just waited even till 2002, 2003, 2004, 2008, when you knew who the winners were, that was actually a great time to invest in even a company like Amazon.

Jason Moser: That’s a really good lesson.

Travis Hoium: This one’s fun. OpenAI has 800 million weekly active users. How many users did AOL have at its peak? Then I have a follow up, Jason. Users. How many subscribers? That’s the, basically households. We were sending disks around, in those days.

Jason Moser: That’s the thing, OpenAI, 800 million weekly some odd user, 20 million paying subscribers. They got to figure out a way to short that up. AOL, I have no idea. Households,125 million.

Travis Hoium: John?[laughs]

Jon Quast: Well, I want to change my answer now. I was going to go with eight million. Here’s why. You had other companies. You had Juno, you had NetZero. You had all those. The trend started, but then eventually we switched off of those things. I was going to say eight million.

Jason Moser: John, I could be spectacularly off.

Travis Hoium: John, you’re actually pretty close, 25 million was their peak. But here’s the follow up. When did AOL shut down its dial up service?

Jon Quast: I think I know this one. It was earlier this year.

Travis Hoium: Jason do you want to?

Jason Moser: I was going to say, you would think they did this 15 years ago. It just happened, like John said, very recently. I think sometime within the last year, they actually stopped the whole thing.

Travis Hoium: It was last week.

Jon Quast: I would love to know the guy who was still using it two weeks ago.

Travis Hoium: Who was shocked that their Internet was shut down.

Jason Moser: Not one person.

Travis Hoium: I got a couple of quick ones here. At its peak, how much was invested annually in the USTelecom buildout? The thing that I wanted to bring in here is we talk about the .com bubble bursting. But in the late ’90s, there was really two bubbles. There was the Internet bubble, so the companies that was a valuation bubble, and there was basically an investment bubble where telecoms were investing a lot of money in building out the fiber that Jason mentioned earlier. But what was the actual number that they were putting in the ground? This is just in the US. What is your guess, Jason? Annual number, annual peak.

Jason Moser: One hundred billion dollars.

Travis Hoium: John.

Jon Quast: Did you say million or billion?

Jason Moser: Billion.

Jon Quast: Man, I was going with 10 billion.

Jason Moser: Again, it could be spectacularly off.

Travis Hoium: Jason, you’re about right, 118 billion in 2000. I believe we’ve only passed that number in two years since then. Interesting that the telecom buildout was basically hockey stick growth rate, and then it just plateaued. The other one that we’re not going to get to that is a similar is Apple in 2007, sold 1.4 million iPhones. 2015, that got up to 231 million, and then essentially plateaued. The question, for all these businesses is, when do you hit that plateau? Because that’s when you could potentially run into problems. Here’s the one I wanted to end on quickly. From January 1st, 2000 to March 2000, how much did the QQQ NASDAQ-100 rise? Then my follow up is, how much did it fall over the next six months, John? How much did it go up in those first three months? How much did it go down in the next six?

Jon Quast: I’m going to guess for going up, I’m going to guess it went up 15% during those three months. Then I believe there was a 50% drawdown from there.

Travis Hoium: Jason?

Jason Moser: I was going to say 20% for the first one. Then for the next six months, from that point, I think it fell.

Travis Hoium: From March to September.

Jason Moser: March to September, I would say it fell probably a good 60%.

Travis Hoium: Up 18% in those first, a little less than three months. Then over the next six months, fell 71%. Up an escalator out of window is the way that we quit this. Well, hopefully that was good context for people because I think we can always learn from history whether things repeat or not, they typically rhyme. I think that’s how the saying goes. When we come back, we will get to the stocks that are on our radar. You’re listening to Motley Fool Money.

As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. One company I want to bring into the discussion, we’ve high level, talked about history and AI. But Google had some interesting announcements. OpenAI is obviously getting all the attention, but Google Gemini Enterprise was announced this week. Jason, what did you take away from that?

Jason Moser: A few things, I think. I use both Gemini and ChatGPT interchangeably. Probably use Gemini a little bit more. I wasn’t terribly surprised to see the announcement because this is an arms race. I think it speaks to Google’s ability to respond to market forces and competition. I think, also the real advantage that it has, and it’s already massive user base and the powerful business model, not to mention just customer mind share. I think ChatGPT absolutely is doing a great job on customer mind share, but going back to earlier in the show, when we were talking about 800 million some odd weekly users, only 20 million really of those are subscribers. I think that is just a big hurdle for a company like ChatGPT to overcome. The reason why Google doesn’t have to worry about it so much is because they’ve got a business that’s funded by this powerful advertising model, not to mention it’s growing Cloud business, as well. Now, when you look at Google in this space, they’re a total package. What’s that? They call it a full stack player?

Travis Hoium: A few of the things they announced, it pulls Gemini into applications. This goes into GCP, Google Cloud Platform. That is actually a profitable business. I think that’s something, as investors, we should highlight. OpenAI is losing money. They’re not public yet, but this is a huge growth business for Google and for Alphabet, and it is now profitable, as well. I think the idea here is, this is going to be an enterprise play along with, hey, you know what? If Gemini as a consumer app wins great.

Jason Moser: Well, I think this shows a couple of things. This technology at its core is totally replicable. Basically, all they need is the resources and the time to be able to do it. I think the thing that’s not necessarily replicable is the power under the hood, so to speak, with what Google has built through the decades. ChatGPT is just not there yet. It’s not to say they can’t get there. Don’t get me wrong, but I’m just saying that it’s a much younger company that still has a lot to prove. From that perspective, again, I look at something like a Google today, and I think, wow, they’re doing a lot of really neat stuff. I think ChatGPT is doing a lot of really neat stuff, too. I think we’re going to see at some point, OpenAI is going to have to resort to some sort of an ad supported model in order to be able to continue generating that revenue, or they’re just going to have to come up with a way to grow that subscriber number, which is just so small today compared to what Google has just on an ongoing basis.

Travis Hoium: The 800 pound gorilla in the room that we always continue to overlook. Let’s get to this accident on our radar. John, I’m going to have you go first. What is on your radar this week?

Jon Quast: On my radar right now is a company called Rubrik that is ticker symbol RBRK. This is a small cybersecurity company. But what I like about this is that it’s not trying to prevent attacks. Its business model is assuming an attack has already taken place, and it’s going to get your business back up and running in a fraction of the time. You think about that. That’s really an interesting counter positioning, when it comes to maybe what your CrowdStrikes of the world are trying to do. That’s really interesting. It trades at about 15 times its sales. You look at its annual recurring revenue. It’s up 36%. That’s a good growth. Gross margin has jumped to about 80%. Those two things right there signal to me that I don’t think it looks terribly overvalued. It does generate positive free cash flow, despite being a young business. It has a net cash position. It’s adding new customers at a good pace. But with only 2,500 spending 100,000 a year, I think there’s plenty of room to grow that. Net dollar retention is over 120%, so its existing customers are spending more over time. I really like its co-founder and CEO, Bipul Sinha. He really values this mentality of basically innovate or cease to be a business. That could make things a little bit volatile, but I think it’s going to also potentially make it a key innovator here in the cybersecurity space. It’s definitely on my radar and one I’m watching.

Travis Hoium: Dan, what do you think about Rubrik?

Dan Caplinger: I do like the company, John, but I have a question about what they call themselves. They call themselves a zero trust data security and zero trust doesn’t exactly make me feel good.[laughs].

Jon Quast: That’s an unfortunate way to talk about it in the trade.

Travis Hoium: Jason, what is on your radar?

Jason Moser: Something we’ve been doing here on the website recently with the analyst team, it’s something we’re calling the Analyst Stream, and a couple of days a week, we’re taking a topic of the day and all just offering our spin on it. Today, Friday, we’ve got safety stock pitches for folks. A stock that I recently purchased from my own portfolio with safety in mind is Waste Management. Ticker is WM. As the old saying goes, your trash is my treasure, and we certainly produce a lot of trash here, but weights management, they own or operate the largest network of landfills in the US and Canada with 262 sites, making it the top dog. They also benefit from a growing recycling segment, renewable energy segment, and healthcare solutions business, too. Because you remember they just acquired Stericycle last year, I think, given the nature of the market there, trash is pretty reliable. I think holding onto this one for a decade or longer makes a lot of sense for investors.

Travis Hoium: Dan, what do you think about investing in garbage?

Dan Caplinger: Garbage isn’t going anywhere, gang. We’re not going to stop making it. It’s going to be something that we’re going to have to deal with forever.

Jason Moser: As the kids say, Dan, it true.

Travis Hoium: Dan, Rubrik or Waste Management, which one is going on your watches?

Dan Caplinger: Like I said, garbage ain’t going anywhere. We’re going to go Waste Management. I like that dividend, too.

Travis Hoium: We are out of time this week. Thank you for listening to Motley Fool Money. We’ll see you here tomorrow.

NuScale Power (SMR -8.95%) stock has had a breakout year. Shares are up more than 170% since the start of 2025. It hasn’t been a smooth ride for shareholders, though. NuScale stock has plunged about 40% twice just since January.

This week was another turbulent period for the stock. As of late Thursday, NuScale Power shares are 15% off this week’s highs, yet still up by 24.2% since last Friday’s close, according to data provided by S&P Global Market Intelligence.

Image source: Getty Images.

NuScale Power’s Trump tailwind

NuScale has been a big beneficiary of what it calls “multi-billion dollar federal support.” Several executive orders signed by President Trump earlier this year have boosted the nuclear power sector. Even prior to the current Trump administration, bipartisan passage of the ADVANCE (Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy) Act of 2024 has helped streamline approvals by the National Regulatory Commission for faster deployment of nuclear power projects.

This week another federal department spurred investors to jump into NuScale Power stock. The U.S. Army announced the launch of the Janus Program. The initiative is meant to fast-track the installation of commercially owned and operated small nuclear reactors to provide energy to domestic military installations.

Investors should be wary of jumping into NuScale stock after this week’s surge, though. While it has just begun generating revenue from a Romanian power project, investors have pushed its enterprise value to over $6.5 billion. Consider that revenue for the second quarter was just $8.1 million. Investors who believe in the future of modular nuclear reactors should still consider it a speculative investment.

On October 16, 2025, Collar Capital Management, LLC disclosed a new position in Salesforce (CRM 3.83%), acquiring 14,161 shares in a trade estimated at $3.36 million as of September 30, 2025.

What happened

According to a filing with the U.S. Securities and Exchange Commission (SEC) dated October 16, 2025, Collar Capital Management, LLC initiated a new position in Salesforce, purchasing approximately 14,161 shares. The estimated value of the acquisition was $3.36 million as of September 30, 2025. This transaction brought the fund’s total number of reportable positions to 71.

What else to know

This new $3.36 million position accounts for 2.36% of the fund’s $142.14 million in reportable U.S. equity holdings as of September 30, 2025.

Top holdings after the filing:

NASDAQ:MSTR: $7.33 million (5.2% of AUM) as of September 30, 2025

NASDAQ:TSLA: $7.19 million (5.1% of AUM) as of September 30, 2025

NASDAQ:MU: $5.15 million (3.6% of AUM) as of September 30, 2025

NASDAQ:COIN: $4.96 million (3.5% of AUM) as of September 30, 2025

NASDAQ:AAPL: $4.85 million (3.4% of AUM) as of September 30, 2025

As of October 15, 2025, Salesforce shares were priced at $236.58, down 17.95% over the past year and underperforming the S&P 500 by 32.23 percentage points (source: FMP, 1-year price change: -17.95%, 1-year alpha vs S&P 500: -32.23%).

Company overview

Company snapshot

Salesforce offers a comprehensive suite of cloud-based solutions, including its Customer 360 platform, Sales, Service, Marketing, Commerce, Tableau analytics, MuleSoft integration, and Slack collaboration tools.

It serves a global customer base across industries including financial services, healthcare, and manufacturing.

The company generates revenue primarily through subscription-based software and professional services.

Salesforce is a leading provider of enterprise cloud software, enabling organizations to manage customer relationships and business processes at scale. Its platform-centric strategy and broad product ecosystem position it as a key player in digital transformation initiatives.

Foolish take

Collar Capital appears to be making a contrarian move with the customer relationship management (CRM) specialist. The stock has tumbled about  26% in 2025.

Salesforce wasn’t a holding for Collar Capital in the second quarter. After buying 14,161 shares in the third quarter, it’s the fund’s 13th largest holding.

Salesforce was the second largest new acquisition Collar Capital completed in the third quarter. It also acquired 12,590 shares of UnitedHealth Group worth about $4.3 million. UnitedHealth Group is now the fund’s sixth largest holding.

Salesforce’s investments in artificial intelligence are starting to pay off for investors. In its fiscal second quarter that ended July 31, 2025, Data Cloud and AI annual recurring revenue climbed over 120% year over year to $1.2 billion.

Success with its new AI tools encouraged management to raise expectations. Now, it expects operating cash flow in fiscal 2026 to rise by 12% to 13% year over year.

Glossary

AUM: Assets under management – The total market value of investments managed by a fund or investment firm.

Position: The amount of a particular security or asset held in a portfolio.

Reportable positions: Holdings that must be disclosed to regulators, typically due to size or regulatory requirements.

Stake: The ownership interest or share in a company or asset.

Filing: An official document submitted to a regulatory authority, often detailing financial or ownership information.

Alpha: A measure of an investment’s performance relative to a benchmark, indicating value added or lost.

TTM: The 12-month period ending with the most recent quarterly report.

Dividend yield: A financial ratio showing how much a company pays in dividends each year relative to its stock price.

Cloud-based solutions: Software and services delivered over the internet rather than installed locally on computers.

Platform-centric strategy: A business approach focused on building and expanding a central technology platform for multiple products or services.