growth

You can make a little money go a long way, as long as you invest in the right growth stocks. The risks are understandably high. The valuations may seem outlandish today, but interesting things happen to stocks that are price for perfection when reality exceeds perfection.

I believe that Figma (FIG 7.74%), Axon Enterprise (AXON 0.90%), and Toast (TOST 0.85%) are three growth stocks to invest $1,000 right now. Let’s take a closer look.

1. Figma

Thrill seekers ride roller coasters over the summer. Investors looking for white-knuckled ups and downs found that in Figma. The developer of design tools for websites and mobile apps went public less than three months ago at $33. The IPO has not stood still. Figma traded as high as $143 out of the gate. It is trading 60% below that early August peak as of Monday’s close.

Figma hit the market checking all of the boxes and buzzwords that rightfully make growth investors tingly with wealth-altering potential. There are other cloud-based platforms that help spruce up and simplify digital offerings, and Figma isn’t the only one putting artificial intelligence (AI) front and center. It’s competitively priced, as low as $3 to as high as $90 a month for its premium subscriptions. Free starter accounts woo potential payers.

Image source: Getty Images.

You can’t be a growth stock without growth, and Figma delivers on that front. Revenue rose 48% last year. Canva — who could go public later this year — grew its top line at half of Figma’s clip in 2024. Canva is admittedly three times as a large as Figma in terms of revenue. Desktop publishing pioneer Adobe (ADBE 0.98%) competes with Figma and Canva with its Adobe XD vector design tool. It’s growing its overall business at a 10% to 11% pace for the fourth consecutive year.

Growth is slowing for Figma. Revenue rose 46% through the first three months of this year. Last month it announced 41% year-over-year growth for the second quarter, its first report as a public company. Don’t let that deter you from this opportunity to pick up Figma at a deep discount to its summertime high. Figma is now profitable. It’s also growing in popularity. Its customers are digging in with Figma. Its net dollar retention rate for customers with annual recurring revenue north of $10,000 is currently 129%. Put another way, major returning accounts are spending 29% more over the past year through Figma than the prior 12 months.

The stock isn’t cheap at 28 times trailing revenue and a forward earnings multiple approaching 200. This will scare many investors away and attract short sellers. Let it happen, Figma investors. When Canva surges on its IPO it will only draw more attention to the smaller player growing a lot faster.

2. Axon

If you’re comfortable with Figma-esque multiples, but want a more seasoned public company, Axon fits the bill. There’s a good chance that it has video evidence of its success. Axon is the leading provider of wearable body cameras used by law enforcement and other groups to record confrontations and events. It also runs Evidence.com, the cloud-based platform that stores its growing video files. Oh, it’s also still making its iconic TASER stun guns.

Axon is trading for 24 times revenue and 180 times earnings. It’s not for the squeamish, but it has always climbed the valuation wall of worry. It’s a 30-bagger over the past decade, and a still market-thumping 7-bagger over the last five years. It has earned the upticks. Annual revenue growth has topped 20% in each of the past 10 years, and business is actually picking up lately. This will be the third consecutive year of better-than-30% top-line growth. Customers pay Axon a premium for the security it provides. Investors pay a premium on Axon for the growth it provides.

3. Toast

Toast rounds out this list of companies providing tech tools to enhance the unlikely markets of site design, enforcement, and in this case restaurant stocks. Toast provides a cloud-based solution for eateries that is more than just the point-of-sale transaction settler that diners see. It helps operators manage everything including inventory, loyalty programs, table turns, and third-party delivery orders.

Success breeds success. Toast is becoming an essential investment in the cutthroat restaurant industry. The 148,000 different locations it’s currently serving is a 24% jump over the past year. There are currently challenges for the industry, but wait until Toast’s growth is more than just its expansion rate. The secret sauce to Toast is when operators dig deeper into its growing ecosystem. When the eatery space bounces back, Toast will spring even higher. The valuation multiples are lower than Figma and Axon, but is has the same scalability and dynamic runway for growth. Order up.

The frenzy over artificial intelligence (AI) stocks kicked off in late 2022 with the arrival of OpenAI’s ChatGPT. While this watershed moment occurred years ago, the AI market shows no sign of slowing down.

In fact, Google parent Alphabet (GOOGL -0.16%) (GOOG -0.04%) achieved a recent breakthrough with Gemini, a large language model (LLM) comparable to ChatGPT in many ways.  The innovation suggests the AI industry could enjoy prosperity for decades.

If so, now may be the time to invest in AI giants like Alphabet. Here’s a dive into the company’s artificial intelligence accomplishment, as well as the implications for Alphabet’s stock and the broader AI market.

Alphabet’s AI achievement

In September, Alphabet’s Gemini achieved a groundbreaking outcome, becoming the first AI model to win a gold medal in an international computer programming competition. It successfully solved complex, real-world calculations that stymied human participants.

Google DeepMind, Alphabet’s AI research division, was responsible for Gemini. The DeepMind team highlighted the significance of the landmark achievement by stating, “Solving complex tasks at these competitions requires deep abstract reasoning, creativity, the ability to synthesize novel solutions to problems never seen before, and a genuine spark of ingenuity.”

Gemini demonstrated these traits in the competition, including successfully coming up with a creative solution to one challenge that no human participant was able to solve. This result marked a crucial step on the path toward artificial general intelligence (AGI). AGI is a theoretical level of AI proficiency considered equivalent to human thinking.

Gemini’s milestone is a memorable bellwether, akin to the moment when the world was stunned by IBM’s Deep Blue computer beating the reigning human chess champion in 1997.

How Alphabet’s milestone impacts the AI industry

A quarter-century after Deep Blue’s achievement, OpenAI’s introduction of ChatGPT opened the floodgates for the current AI boom. Now, Gemini’s breakthrough signals the start of a new era in the evolution of artificial intelligence, as the tech edges closer to the capacity for original thought.

AI is evolving from simply completing specific tasks toward solving more complex problems that require leaps in thinking — for example, designing innovative microchips or coming up with new medicines. The possibilities to upend markets in the years to come could be akin to how today’s AI is delivering unprecedented transformation across industries.

One example is Nvidia, the semiconductor chip leader. AI systems require increasingly potent computing capabilities. This need led to the company’s impressive 56% year-over-year sales growth to $46.7 billion in its fiscal second quarter, ended July 27, and drove its stock to a $4 trillion market cap.

Alphabet was among the first to power its AI with Nvidia’s new Blackwell chips. When the chip debuted in 2024, Nvidia stated, “Blackwell has powerful implications for AI workloads” and that the tech would help “drive the world’s next big breakthroughs.” Following Gemini’s AI milestone, it appears that Nvidia’s words were something more than empty marketing boasts.

The computing power needed to produce the Gemini breakthrough must have been substantial. Alphabet declined to specify how much, but admitted it was more than what’s available to customers subscribing to its top-tier Google AI Ultra service for $250 per month. With that kind of computing capability required for AI to perform advanced reasoning, Nvidia and other hardware providers can continue to benefit from AI advances.

What the Gemini breakthrough means for Alphabet stock

While building toward artificial general intelligence will increase computing costs for Alphabet, the company can afford it. Thanks to its search engine dominance, Alphabet generates substantial free cash flow (FCF) to invest in its AI systems. The company produced $66.7 billion in FCF over the trailing 12 months through Q2.

In addition, AI is already delivering business growth for the company. Its second-quarter sales were up 14% year over year to $96.4 billion as customers adopted AI features Alphabet released onto its search engine, cloud computing services, and advertising platforms.

Despite these strengths and Gemini notching a significant AI victory, Alphabet shares remain reasonably valued compared to rivals such as Microsoft. This can be seen in the stock’s price-to-earnings (P/E) ratio, which reflects how much investors are willing to pay for each dollar of a company’s earnings, based on the trailing 12 months.

Data by YCharts.

The chart shows Alphabet’s P/E ratio is lower than Microsoft’s, suggesting it’s a better value. In other words, now could be a good time to pick up Alphabet shares at a reasonable price.

Since the Google parent isn’t the only beneficiary of ongoing AI progress, it’s worth considering the growth potential in other AI players, such as Nvidia, IBM, and Microsoft. As the tech industry moves closer to achieving AGI, the AI space is poised for innovations that are likely to fuel the sector’s growth for decades to come.

If you’re hesitant to put $1,000 into a new trade in any of the stock market’s most popular picks right now, you’re not crazy. The S&P 500 (SNPINDEX: ^GSPC) is now priced at a frothy 25 times its trailing earnings, while data from Yardeni Research indicates the “Magnificent Seven” stocks that have led the market higher since 2023 sport an average forward-looking price/earnings ratio of more than 30. That’s a lot, leaving them — along with the overall market — vulnerable to weakness. Factor in the tariff wars that don’t appear to be cooling off, and it’s easy to justify staying on the sidelines.

The situation doesn’t require you to sit out altogether, though. It just means you should make a point of investing that $1,000 in growth companies with few (if any) direct ties to the United States, and stocks with more reasonable valuations relative to their potential growth.

One name worth a $1,000 investment comes to mind above all the rest.

What’s MercadoLibre?

If you’ve ever heard of MercadoLibre (MELI -3.18%), then there’s a good chance you’ve heard it called the “Amazon (AMZN -1.34%) of Latin America.” And it’s not an unfitting description. It isn’t a perfectly accurate one, though. Yes, MercadoLibre helps companies sell goods online. Unlike Amazon, though, this company also operates a major digital payments business that looks more like PayPal‘s, yet also manages a logistics arm that supports its e-commerce, provides a range of banking and bank-like services to merchants, and even helps brick-and-mortar stores handle inventory and payments. It’s a proverbial soup-to-nuts business.

And it’s growing. Last quarter’s revenue growth of 34% carried its top line to nearly $6.8 billion, accelerating long-established bigger-picture uptrends, and pumping up profits by almost as much.

Data source: Simply Wall St. Chart by author.

All of it’s just happening in Latin America, with the bulk of its business taking shape in Brazil, Mexico, and Argentina.

The thing is, this is exactly where you’d want one of your holdings to focus right now in the way MercadoLibre is positioning itself for the future.

Plugging into the continent’s connectivity revolution

Getting straight to the point, where North America’s internet connectivity industry was 20 years ago is in many ways where South America’s is now. Although the internet has existed there since its infancy, it’s only now becoming commonplace. For perspective, whereas Pew Research says 96% of U.S. adults now have access to broadband internet, Standard & Poor’s reports that less than 60% of Latin American and Caribbean households are likely to even have the option of fixed broadband service before the end of this year.

There’s a geographically unique nuance worth noting, however. That is, a wide and growing swath of the region’s population uses their smartphones as their primary — and sometimes only — point of access to the World Wide Web. GSMA Intelligence suggests Latin America’s 2023 count of 418 million mobile internet users should reach 485 million by 2030. Even then, though, there’s room for continued growth. At 485 million, that would still only be a penetration rate of 72% of the region’s population.

And just like here, it’s not taking South America’s consumers very long to figure out that their handheld devices are great tools for shopping online, and even making digital payments. Industry research outfit Payments and Commerce Market Intelligence expects the continent’s e-commerce industry to grow 21% year over year in 2025, en route to nearly doubling in size between 2023 and 2027. Simultaneously, the research outfit reports 60% of consumer spending in Latin America is now facilitated by digital and electronic payments, led by Brazil — where MercadoLibre is a force.

The company is simply riding this growth trend. Analysts expect MercadoLibre’s top line to more than double between last year and 2027, more than doubling its bottom line with it.

Just focus on the bigger picture

There is some drama. Investors keeping tabs on this company may recall that shares tumbled in early August in response to the company’s disappointing Q2 profit. Despite the strong sales growth, per-share earnings of $10.39 fell short of analysts’ estimates of $11.93, falling 1.6% from the year-ago comparison. Blame free shipping, mostly. Taking a page out of Amazon’s playbook, MercadoLibre spent more on free shipping in Brazil than investors were anticipating.

Now, just take a step back and look at the bigger picture that most investors seem to be seeing again, nudging the stock higher as a result. The free shipping strategy worked out all right for Amazon. It might work out even better for MercadoLibre in the long run, given just how fragmented the region’s e-commerce market currently is. In this vein, eMarketer says MercadoLibre’s market-leading share of the region’s e-commerce business still only accounts for about one-third of the industry’s total sales, with no other player accounting for more than 5% of the regional market’s online shopping.

In other words, there’s an opportunity for an enterprise that’s willing and able to act on it. MercadoLibre seems to be that enterprise. Current and interested investors are just going to need to be patient, as the world was with Amazon.

This might help: Despite the added expense of free shipping that’s likely to linger for a while as a means of turning consumers into regular customers, the analyst community isn’t dissuaded. The vast majority of them still rate MercadoLibre stock as a strong buy, maintaining a consensus target of $2,920.91, which is 17% above the ticker’s present price. That’s not a bad tailwind to start out a new trade with if you have $1,000 available to invest.

In June 2020, I happily invested in one of my favorite consumer brands: Coffee giant Starbucks (SBUX -0.36%). But after it’s underperformed the returns from the S&P 500 by a wide margin over these five years, it’s high time I reconsidered its role in my portfolio.

I believed that Starbucks stock would provide my portfolio with a blend of growth and income. For growth, I was quite optimistic that the company’s business in China would quickly rebound from the pandemic and unlock much higher earnings. That hasn’t happened. With it now looking for strategic options for its China business, it’s time for me to wave the white flag here.

Regarding income, Starbucks didn’t disappoint. It’s increased its dividend payment every year that I’ve held it, and is currently on a 14-year streak of doing that. And as of this writing, the dividend yield is approaching 3%, which is close to the highest it’s ever been.

Therefore, I can’t really complain when it comes to dividend income from Starbucks stock. But growth has been lacking. Going back to just before the pandemic started, Starbucks has averaged a single-digit compound annual growth rate (CAGR) for revenue. This often isn’t good enough to propel market-beating stock performance. So the question is: Can I find a comparable dividend-paying stock that offers better growth? Indeed, there are some options.

1. Academy Sports & Outdoors

With only 300 locations, sporting goods retailer Academy Sports (ASO 1.77%) is easy to overlook. But if management has its way, the company could put up better top-line growth than Starbucks from here.

Perhaps the biggest way that Academy Sports is driving revenue growth is by opening new stores. This year, it hopes to open up to 25 locations. It had already opened eight of these by the end of the second quarter of 2025. Past guidance suggests that the company intends to open around 150 additional locations by the end of 2028.

These new store openings could allow Academy Sports to deliver a double-digit growth rate in coming years. Management is also known for methodically returning cash to shareholders. It buys back stock, and its quarterly dividend has grown at a nice pace in recent years.

ASO Shares Outstanding data by YCharts.

With a dividend yield of only 1%, Academy Sports won’t necessarily attract income investors today. But those with a long-term view hope to ride the company’s growth plans to much higher earnings in time, which could result in much better dividend income down the road.

2. Arcos Dorados

Restaurant chain Arcos Dorados (ARCO -0.15%) owns the rights to the McDonald’s brand in 21 countries in Latin America and the Caribbean, allowing it to own and operate franchised locations and sub-franchise to other operators. With over 2,400 locations, it’s the largest independent McDonald’s franchisee.

Differences in currency exchange rates are masking double-digit revenue growth for Arcos Dorados. For the second quarter of 2025, the company reported just 3% year-over-year growth. But adjusting for currency fluctuations, it grew by 15%. This includes both same-store sales growth and the contribution of new restaurant locations.

With a 3.5% dividend yield, Arcos Dorados stock is more attractive than Starbucks stock as an income investment. The company also pays out just a small portion of its earnings as a dividend, leaving plenty of room for future growth.

About one-third of Arcos Dorados’ locations are sub-franchised. And like McDonald’s itself, Arcos Dorados generates some revenue from its franchisees via rental income — it owns the land and buildings at nearly 500 locations. This real estate layer to the business can make it a stronger investment compared to other restaurant companies.

3. Stick with Starbucks?

Over my investing career, I’ve learned to only sell a stock after taking plenty of time to think it over. So while I’m thinking about selling Starbucks stock and buying a replacement that’s growing faster and still offers income, it’s not a done deal. In fact, I see some reason to continue holding Starbucks stock.

It’s been just over one year since Starbucks hired new CEO Brian Niccol, and he’s still trying to reinvigorate the brand. That starts with bringing back the more inviting coffeehouse atmosphere. The company just announced that it will close hundreds of locations that don’t fit its vision.

Niccol’s plan comes with an expensive price tag of around $1 billion. But investors’ expectations are now low, and Starbucks can start bouncing back as difficult decisions pay off.

For now, I believe the downside risk for Starbucks stock is low because it’s still a top consumer brand and Niccol has a good reputation as an operator. Academy Sports and Arcos Dorados are on my radar as potentially filling the role in my portfolio currently filled by Starbucks. But I see no reason to rush this decision today, so I’ll keep holding Starbucks stock for now.

MANCHESTER, Leeds and Oxford have been named as top powerhouses for business growth in the UK, according to a report.

The study, carried out by NatWest and data company Beauhurst, analysed growth across innovation, profit, headcount and turnover among mid-market firms nationwide.

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Manchester ranked highly thanks to its thriving creative and digital sectors, fuelled by MediaCityUK and a flourishing start-up scene.

Oxford stood out for its research-driven businesses, many of which began as university spinouts before scaling into significant mid-market enterprises.

Leeds, meanwhile, has built a reputation in health technology to complement its long-established financial services sector, strengthened by close ties to NHS Digital and leading hospitals.

While London remains the largest centre for profit, headcount and turnover in the mid-market, the report reveals other areas of the UK are increasingly standing out for their innovation.

Smaller authorities also made the list, with Slough and Telford & Wrekin both highlighted as growth hotspots.

Swindon has also emerged as one of the nation’s leading climate technology hubs, thanks to its cluster of renewable energy and clean-tech firms.

Andy Gray, managing director of commercial mid-market at NatWest, said: “The UK’s economic story is no longer written only in its biggest cities.

“Across the country, mid-sized businesses are scaling up, investing in people and creating high-quality jobs.

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“These boom regions demonstrate that entrepreneurial energy and economic resilience can flourish anywhere.”

Among the emerging centres of growth, researchers pinpointed South Cambridgeshire as home to a thriving cluster of university spinouts.

Aberdeenshire also performed strongly in the innovation category, reflecting its long-standing expertise in oil and gas, now being redirected into renewable energy, carbon capture and wider climate technologies.

Local firms there have benefitted from specialist engineering skills, proximity to North Sea projects and strong research links – helping the area reinvent itself as a hub for innovation in the UK’s energy transition.

The research focused on mid-market companies turning over between £25m and £500m annually – these businesses account for 26 per cent of employment and 30 per cent of UK economic Gross Value Added.

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The findings also project that, with the right support, mid-market companies could add an extra £115 billion in turnover and £35 billion of Gross Value Added by 2030 – despite representing just 0.5 per cent of businesses in the UK.

Henri Murison, chief executive at The Northern Powerhouse Partnership, said: “While London remains an important location for mid-market businesses, this new report from NatWest clearly points to the impressive growth and innovation that is taking place in the North.

“As the Autumn Budget approaches, we should be backing concrete steps towards adoption and diffusion of innovation in businesses that are seeking to scale up, providing more high skilled jobs in Northern towns and cities, and playing a fundamental part in delivering the UK Government growth mission.”

Louise Hellem, chief economist at the CBI, said: “This report underlines the vital role the mid-market sector plays in driving regional growth and strengthening our economy.

“These businesses are not just surviving, they’re expanding, innovating, and investing in their communities.

“To fully unlock the UK’s potential and develop high growth clusters, we should harness their strengths as part of regional growth plans, ensure they are engaged in shaping local skills plans and have greater access to finance to scale.”

The U.S. economy will be hampered by the Trump administration’s tariffs in the coming months, which along with interest rate cuts could lead to a “stagflation-lite” scenario of modestly elevated inflation and unemployment, according to the UCLA Anderson Forecast released Wednesday.

The fourth-quarter estimate also predicts that rising layoffs could lead to a recession, and if President Trump is successful in exerting more control over the Federal Reserve, a “full blown stagflation scenario becomes a more significant risk.”

“This forecast is being produced at a time when more extreme scenarios have become increasingly plausible, even though they do not yet represent our baseline outlook,” states the report by Clement Bohr, senior economist at the forecast.

UCLA’s report notes that the labor market “deteriorated notably” in June while inflation pivoted away from a path of “gradual normalization” onto a rising trajectory.

The quarterly forecast does not take into account the government shutdown that began Wednesday that could results in thousands of layoffs, but predicts third-quarter GDP growth will come in at just 1% on a seasonably adjusted basis, and it will weaken further as the full cost of the tariffs takes hold.

It expects growth to recover in the middle of next year and reach 2% by the fourth quarter, remaining there throughout 2027.

Driving the stagflation prediction is an effective tariff rate of about 11%, with the risk of future levies on pharmaceuticals and the potential lack of a resolution of the China trade dispute. The report notes the political pressure on Federal Reserve Chairman Jerome Powell and the decision by the bank to cut the federal funds rate by a quarter point in September. UCLA predicts a similar rate cut this month.

Trump’s “big beautiful” budget reconciliation bill passed in July, which included $703 billion in temporary tax cuts over the next four years starting in 2026, also will provide substantial stimulus. The Consumer Price Index is expected to peak at 3.6% in the first quarter of next year before easing.

However, the economy will be held back by a tightening labor supply caused by retiring baby boomers and restrictive immigration policies. The unemployment rate has crept up to 4.3% and is expected to peak at 4.6% early next year.

Also Wednesday, closely watched ADP Research released figures showed private-sector payrolls decreased by 32,000 in September with job growth slowing across many industries.

The billions of dollars being invested in artificial intelligence by large technology firms has helped prop up the economy, the forecast noted, which should result in productivity gains — but the capital expenditures should tail off as a “trough of disillusionment” sets in when revenue gains don’t meet expectations.

The report also expects consumer consumption to weaken following a surge in electric-vehicle purchases in the third quarter due to the expiration of federal tax credits last month.

Mark Zandi, chief economist at Moody’s Analytics, said if the government shutdown lasts a week or two it won’t have a “meaningful economic impact.” However, if it lasts for a month or more and is accompanied by mass federal layoffs, it would have a profound effect on the economy, Zandi said.

“It would wreak havoc on the financial markets as global markets and investors begin to wonder if we can govern ourselves,” he said. “That would mean higher interest rates and lower stock prices.”

In the second quarter of 2025, MP Materials‘ (MP -0.76%) revenue declined sequentially from the first quarter. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings both fell deeper into the red. That’s not a change that most investors will find pleasing to read, but the company’s future remains very bright.

Here’s why MP Materials’ growth isn’t stalling, even though there’s a lot of heavy lifting for the company to do from here.

What does MP Materials do?

MP Materials mines for and processes rare earth metals. These metals are vital to the technology sector and get used in everything from cellphones to missiles. That said, MP Materials is really best viewed as a mining company.

Image source: Getty Images.

That’s important because mining is a very capital-intensive business. A company has to find a place to mine, get approval for it, build the mine, operate it (in this case also process the output into usable rare earth metals products), and then return the mine back to its pre-mine state once it is depleted. MP Materials is really just at the very beginning of this process, which is the most expensive from a capital investment point of view.

That said, MP Materials finds itself in a very enviable position thanks to geopolitical issues. The new U.S. tariff regime has led to friction with China, which is the world’s largest producer of rare earth metals. China has been very willing to limit access to these vital metals as it vies for the best tariff deal. That, essentially, has put the world on notice that China can’t be counted on as a supplier of rare earth metals.

MP Materials has a huge opportunity to exploit

MP Materials didn’t just magically find itself here. The company’s specific goal was to create a rare earth metals supplier that is located in an economically and politically stable region. The company is exactly where it wanted to be and that is leading to a huge influx of cash.

The U.S. government has invested in MP Materials. Apple has inked a sizable deal with the company. And, after the stock advance following these two events, the company was able to sell shares into the market at attractive prices. Demand was so strong for MP Materials’ stock that it was able to sell more shares than it had originally planned.

This is all very good news from a growth perspective. It means that MP Materials has the cash it needs to keep building out its business. And that, in turn, means that it still has a huge growth opportunity ahead that will be easier to achieve since access to capital is less of a constraint. If anything, the growth opportunity isn’t stalling out, it is getting more attractive.

Don’t expect instant results at MP Materials

Despite the positives here, there’s still one small problem. MP Materials is a young miner that is building out its business. That takes time and will likely mean red ink for at least a while longer.

MP Materials stock is up over 350% over the past year, with most of that gain coming after the U.S. government’s investment in the company. So while the business has huge growth potential, a lot of that appears to have been priced into the stock in a very short period of time. Investors should probably tread cautiously with MP Materials, which looks like it has become a story stock at this point.

If the story doesn’t happen as expected (including as quickly as expected), the shares could quickly turn lower again even if the long-term opportunity for the business remains robust.

WASHINGTON — The Trump administration said Monday that it will open 13 million acres of federal lands for coal mining and provide $625 million to recommission or modernize coal-fired power plants as President Trump continues his efforts to reverse the yearlong decline in the U.S. coal industry.

Actions by the Energy and Interior departments and the Environmental Protection Agency follow executive orders Trump issued in April to revive coal, a reliable but polluting energy source that’s long been shrinking amid environmental regulations and competition from cheaper natural gas.

Environmental groups denounced the announcement, which comes as the Trump administration has clamped down on renewable energy, including freezing permits for offshore wind projects, ending clean energy tax credits and blocking wind and solar projects on federal lands.

Under Trump’s orders, the Energy Department has required fossil-fueled power plants in Michigan and Pennsylvania to keep operating past their retirement dates to meet rising U.S. power demand amid growth in data centers, artificial intelligence and electric cars. The latest announcement would allow those efforts to expand as a precaution against possible electricity shortfalls.

Trump also has directed federal agencies to identify coal resources on federal lands, lift barriers to coal mining and prioritize coal leasing on U.S. lands. A sweeping tax bill approved by Republicans and signed by Trump reduces royalty rates for coal mining from 12.5% to 7%, a significant decrease that officials said will help ensure U.S. coal producers can compete in global markets.

‘Mine baby, mine’

The new law also mandates increased availability for coal mining on federal lands and streamlines federal reviews of coal leases.

“Everybody likes to say, ‘drill baby, drill.’ I know that President Trump has another initiative for us, which is ‘mine baby, mine,’” Interior Secretary Doug Burgum said at a news conference Monday at Interior headquarters. Environmental Protection Agency Administrator Lee Zeldin and Energy Undersecretary Wells Griffith also spoke at the event. All three agencies signed orders boosting coal.

“By reducing the royalty rate for coal, increasing coal acres available for leasing and unlocking critical minerals from mine waste, we are strengthening our economy, protecting national security and ensuring that communities from Montana to Alabama benefit from good-paying jobs,” Burgum said.

Zeldin called coal a reliable energy source that has supported American communities and economic growth for generations.

“Americans are suffering because the past administration attempted to apply heavy-handed regulations to coal and other forms of energy it deemed unfavorable,” he said.

Trump has clamped down on renewable energy

Environmental groups said Trump was wasting federal tax dollars by handing them to owners of the oldest, most expensive and dirtiest source of electricity.

“Subsidizing coal means propping up dirty, uncompetitive plants from last century — and saddling families with their high costs and pollution,” said Ted Kelly, clean energy director for the Environmental Defense Fund. “We need modern, affordable clean energy solutions to power a modern economy, but the Trump administration wants to drag us back to a 1950s electric grid.’’

Solar, wind and battery storage are the cheapest and fastest ways to bring new power to the grid, Kelly and other advocates said. “It makes no sense to cut off your best, most affordable options while doubling down on the most expensive ones,” Kelly said.

The EPA said Monday that it will open a 60-day public comment period on potential changes to a regional haze rule that has helped reduce pollution-fueled haze hanging over national parks, wilderness areas and tribal reservations. Zeldin announced in March that the haze rule would be among dozens of landmark environmental regulations that he plans to roll back or eliminate, including a 2009 finding that climate change harms human health and the environment.

Coal production has dropped steeply

Burgum, who also chairs Trump’s National Energy Dominance Council, said the actions announced Monday, along with the tax law and previous presidential and secretarial orders, will ensure “abundant, affordable energy while reducing reliance on foreign sources of coal and minerals.’’

The Republican president has long promised to boost what he calls “beautiful” coal to fire power plants and for other uses, but the industry has been in decline for decades.

Coal once provided more than half of U.S. electricity production, but its share dropped to about 15% in 2024, down from about 45% as recently as 2010. Natural gas provides about 43% of U.S. electricity, with the remainder from nuclear energy and renewables such as wind, solar and hydropower.

Energy experts say any bump for coal under Trump is likely to be temporary because natural gas is cheaper, and there’s a durable market for wind and solar power no matter who holds the White House.

Daly writes for the Associated Press. AP writer Todd Richmond in Madison, Wis., contributed to this report.

The market’s moving higher, and there’s a good chance that many of the stocks in your portfolio are having a good year. That doesn’t mean that you have a portfolio loaded with winners. Every investor has laggards, and for me, one of them is Target (TGT 1.02%). I’ve owned the discount retailer through some good years, and lately some bad ones.

Target shares have been cut nearly in half over the past year. Investors tend to shy away from falling stocks, but this out-of-favor stock is high on my list of potential purchases in November. And it’s not the only name I’m looking at. I believe that Duolingo (DUOL 4.29%) and Crocs (CROX 6.63%) — two other stocks I own that have fallen by at least 40% from their 52-week highs — are also ready to bounce back; I think they’re out-of-favor stocks to buy right now.

Let me dive into what I hope will be a timely contrarian take on Target, Duolingo, and Crocs.

1. Target: down 46%

Before I go into what’s holding Target back these days, I want to talk about its juicy dividend. The cheap-chic chain is currently yielding 5.2%, a historic high. With money-market and fixed-income yields heading lower, Target’s quarterly distributions are worth celebrating.

Target is good for the money; it has found a way to boost its dividend for 54 consecutive years. You know how they say that e-commerce will be the end of brick-and-mortar chains? Well, Target has found a way to deliver hikes every year since the commercialization of the internet. This Dividend King‘s latest guidance calls for a profit of between $7 and $9 per share this year, meaning a healthy payout ratio of 51% to 65%.

Image source: Getty Images.

The dividend is sustainable, despite Target’s recent misfires. The retailer is struggling to connect with shoppers. In-store comparable sales slipped 5.7% in its most recent quarter, with overall comps down 3.8% for the period. It’s losing market share — a sobering reality for a company that used to feast at the expense of its retail stock rivals with its now-fading aspirational brand.

But patient investors are getting more than a bountiful 5.2% yield right now; they’re getting a bargain. Target is trading for just 11 times the midpoint of its earnings guidance this year.

Analysts see a return to revenue and net income growth next year. Wall Street profit targets have been inching higher over the past three months, and the mass-market retailer has exceeded bottom-line expectations in two of the last three quarters. Last month’s quarterly report wasn’t popular with most investors, but at least three major analysts boosted their price targets on the company. While the turnaround will take time and a potential uptick in reinvestment obligations, there are worse places to be than riding it out with big dividend checks coming every quarter.

2. Duolingo: down 40%

Unlike Target, Duolingo isn’t going through growing pains. Revenue growth has topped 40% in each of the last five years. The language-learning company’s top line accelerated in its latest quarter, with a 42% year-over-year surge as its healthiest jump in more than a year.

Duolingo’s shares have still fallen 40% since scoring an all-time high in the spring, which doesn’t seem fair. It wasn’t just revenue picking up the pace since the shares peaked — in the most recent earnings report, profit landed 32% ahead of what Wall Street was modeling. There are concerns about artificial intelligence (AI) leveling the playing field for language learning, but that dismisses Duolingo’s own AI enhancements. Its platform and the gamification of learning have made the company a winner.

Unlike the other two names on this list, Duolingo isn’t cheap; it’s trading for nearly 40 times forward earnings. However, it was trading a lot higher when it lacked today’s momentum. The Duolingo owl is wise. This feels like a buying opportunity in any language.

3. Crocs: down 43%

Like another discarded cheap-chic stock, Crocs is a bargain. The maker of distinctive footwear is trading for just 6 times this year’s projected adjusted earnings. As with Target, revenue and profitability are going the wrong way this year.

Crocs has a history of riding the ups and downs of demand for its comfy hole-laden resin clogs. The same can be said of most shoe stocks. It always finds a way to get back in style, doing so consistently for a couple of decades. Its streak of seven consecutive years of top-line gains may come to an end this year, but it’s not likely to stay down for long.

It doesn’t offer the same chunky yield as Target — there’s no payout at all — but bargains come with different perks. Crocs is cheap, and history is on the side of those who believe when the masses do not.

With other tech giants sparring over consumer chatbots, IBM (IBM 1.22%) is quietly positioning itself to dominate a different artificial intelligence (AI) battlefield: the enterprise segment.

The centennial tech titan might seem like an unlikely AI winner, but there’s one key factor that could make IBM the surprise star of the artificial intelligence revolution. IBM’s AI solutions are tailor-made for large corporations.

Image source: Getty Images.

IBM’s secret weapon: Enterprise-class AI

The watsonx platform for generative AI services isn’t trying to write your poetry or plan your vacation. Instead, it’s helping Fortune 500 companies deploy AI with strict attention to data security and regulatory requirements. Combined with Red Hat’s OpenShift platform — IBM’s $34 billion acquisition from 2019 that’s now paying proverbial dividends — the company offers something unique: AI that works within existing enterprise infrastructure.

This isn’t just theory. Banks are using IBM’s watsonx to detect fraud while maintaining compliance with financial regulations. Healthcare systems are deploying IBM’s AI to analyze patient data without violating patient privacy regulations.

It’s all done with auditable data flows. Sure, watsonx will hallucinate from time to time, like any other system based on large language models (LLMs). But when it does, you’ll be able to trace the error back to its original inspiration.

Meanwhile, IBM’s consulting arm helps these enterprises make use of AI solutions. This unique focus on support services creates sticky, long-term business relationships.

The big blue numbers tell the story

IBM’s AI-based Automation segment grew 14% year over year in Q2 2025, while Red Hat revenue continues its double-digit revenue expansion. The enterprise AI market is projected to reach $600 billion by 2028, and IBM is uniquely positioned to capture this opportunity.

Unlike consumer AI companies burning cash on compute costs, IBM’s enterprise focus means higher margins and predictable revenue streams. While others chase the next viral chatbot, IBM is selling the picks and shovels of the enterprise AI gold rush — and that’s exactly why it will thrive. Buying IBM stock today should set you up for robust AI-boom gains.

You don’t need to be ultra-wealthy to start building wealth in the stock market. With just $1,000, investors can buy into promising growth stories and put their money to work in businesses shaping the future. The key is choosing companies with strong tailwinds, clear expansion potential, and the ability to multiply in value over time. Even a modest sum split between the right names can grow meaningfully over the years.

Two stocks that stand out right now are American Resources (AREC 0.72%) and Freshworks (FRSH 0.32%). By allocating roughly $500 to each, investors gain exposure to two very different but compelling growth opportunities: one in the critical minerals powering the clean-energy transition, and the other in software that helps businesses connect with customers more effectively.

Image source: Getty Images.

The critical minerals moonshot

American Resources exemplifies how quickly narratives can transform stock prices. The company spent years as a struggling coal producer before pivoting toward rare earth elements and critical minerals essential for clean energy infrastructure. That strategic shift coincided perfectly with Washington’s push to reduce dependence on Chinese mineral supply chains. The stock has responded accordingly, surging 173% in 2025 as investors price in a future where American Resources supplies the lithium, graphite, and rare earths needed for the energy transition.

The opportunity is massive. The U.S. imports nearly 100% of its rare earth elements despite their critical importance in electric vehicles, wind turbines, and defense applications. Government support for domestic production has never been stronger, with billions in federal funding flowing toward securing supply chains. American Resources is in a position to capture this spending through both its existing operations and development projects. The company’s ReElement Technologies subsidiary focuses on battery material recycling and purification, adding another revenue stream tied to the circular economy.

But small-cap stocks with market values under $500 million carry outsized risks. American Resources remains pre-revenue on many initiatives, burning cash while building out capabilities. Commodity prices swing wildly — what looks like a secular growth story today could become a cyclical disaster tomorrow if rare earth prices collapse. Ultimately, this is a high-risk bet on management execution and Washington’s support for critical minerals — not a play on today’s numbers.

The software discount special

Freshworks tells the opposite story — a profitable growth software company punished for sins it’s already addressing. The customer engagement platform posted over $200 million in revenue last quarter, representing low-teens growth year over year. That’s not hypergrowth, but it’s steady expansion in a market where Salesforce and ServiceNow leave plenty of room for competitors targeting small and mid-sized businesses. Yet the stock has shed 23% of its value this year.

The numbers suggest Freshworks deserves better. Gross margins exceed 84%, typical for quality SaaS businesses. Operating losses are narrowing each quarter as the company balances growth investments with cost discipline. The product suite keeps expanding with AI-powered features for customer support, IT service management, and customer relationship management — capabilities that smaller businesses need but can’t afford from enterprise vendors. With over 68,000 customers globally, Freshworks has proven product-market fit.

The bearish case centers on competition and profitability timing. Salesforce and ServiceNow dominate enterprise accounts with deeper functionality and stronger ecosystems. Reaching profitability might take several more quarters, and the market has shown little patience for companies still burning cash. If the economy weakens, small business customers could churn faster than larger enterprises. But at just 18.5 times forward earnings, much of this pessimism appears priced in.

The $1,000 portfolio

Splitting $1,000 between American Resources and Freshworks creates an intriguing barbell strategy. American Resources offers lottery-ticket exposure to the critical minerals boom — if the company executes and government support continues, the stock could multiply from here. Freshworks provides a more traditional growth story with improving fundamentals, trading at a discount to both the S&P 500 and its closest peers.

It’s been just six months since CoreWeave (CRWV -4.96%) went public, and the stock has more than tripled in its short life as a public company, despite witnessing bouts of volatility during this period. The stock’s rapid rise has been fueled by its fast-improving revenue pipeline, but at the same time, investors have been worried about certain factors.

From CoreWeave’s rapidly rising debt to stock dilution on account of its $9 billion Core Scientific deal, shares of the company have slipped significantly since hitting a high nearly three months ago. However, the company’s latest deal with Nvidia (NASDAQ: NVDA) could help assuage investors’ concerns to some extent and set CoreWeave up for more upside.

Image source: Getty Images

Nvidia’s guarantee is great news for CoreWeave investors

CoreWeave has built its business by offering dedicated artificial intelligence (AI) data centers powered by graphics processing units (GPUs) from Nvidia. It rents out its cloud computing capacity to the likes of Meta Platforms and Microsoft, which account for the majority of its top line. It has also added a third big customer in the form of OpenAI.

The ChatGPT maker offered an initial contract worth $11.9 billion to CoreWeave in March this year, before enhancing the size of the deal by another $4 billion. And now, Nvidia has signed a $6.3 billion contract with CoreWeave that will guarantee the latter’s revenue growth in the long run. Under this agreement, Nvidia will be purchasing any unsold data center capacity from CoreWeave through April 2032.

In a filing with the Securities and Exchange Commission (SEC), CoreWeave pointed out that “Nvidia is obligated to purchase the residual unsold capacity” of its data centers in case its “data center capacity is not fully utilized by its own customers.” CoreWeave’s existing data center capacity is falling short of demand.

CFO Nitin Agrawal remarked on the August earnings conference call that CoreWeave’s “growth continues to be capacity-constrained, with demand outstripping supply.” This is evident from the fact that its contractual backlog increased by close to $14 billion year over year in Q2, driven by the multibillion-dollar contracts the company signed in the quarter.

For comparison, CoreWeave’s Q2 revenue increased to $1.2 billion from $395 million in the year-ago period. Not surprisingly, the company is laser-focused on bringing online more data center capacity so that it can fulfill its massive revenue backlog worth $30 billion. It currently operates 33 dedicated AI data centers in the U.S. and Europe, with active power capacity of 470 megawatts (MW).

However, it has been increasing its contracted data center power capacity at a nice clip so that it can bring more active capacity online. Specifically, CoreWeave’s contracted data center power capacity increased by 600 MW in the previous quarter to 2.2 gigawatts (GW). But even that might not be enough in the long run, as according to McKinsey, data center capacity demand could grow by 4x between 2023 and 2030.

The firm estimates that global data center capacity demand could hit 220 GW in 2030 from 55 GW in 2023 in a midrange scenario. So there is a good chance that CoreWeave could remain capacity-constrained in the long run thanks to the AI-powered data center boom. For instance, McKinsey is expecting a deficit of more than 15 GW in data center power capacity in the U.S. itself by 2030.

As such, CoreWeave may not be left with any residual capacity to sell to Nvidia going forward, as there is a good chance that data center demand will continue to be stronger than supply on account of AI. And now, Nvidia’s guarantee gives CoreWeave investors an extra cushion that should ensure healthy long-term growth for the company, even if there’s a drop in AI computing capacity requirements.

What should investors do?

Nvidia’s guarantee suggests that the demand for AI computing is likely to remain robust in the long run. This should ideally translate into a bigger backlog and stronger growth for CoreWeave, which is just what analysts are expecting from the company through 2028.

CRWV Revenue Estimates for Current Fiscal Year data by YCharts

The massive opportunity in the cloud AI infrastructure market should help CoreWeave sustain impressive growth rates beyond 2028. For instance, even if it clocks 20% annual top-line growth in 2029 and 2030, its revenue could hit $25.6 billion. If the stock is trading at even 5 times sales at that time, in line with the Nasdaq Composite‘s average sales multiple, its market cap could get close to $130 billion. That would be more than double CoreWeave’s current market cap.

Importantly, CoreWeave can now be bought at 16 times sales, which isn’t all that expensive when we consider its remarkable growth.

So investors looking to capitalize on the AI cloud infrastructure market’s long-term growth potential can consider buying this AI stock right away, especially considering that the Nvidia deal is a vote of confidence in CoreWeave’s — and the AI data center market’s — prospects.

On Sept. 18, the S&P Index closed at a fresh all-time high. The popular benchmark continues to march higher. While that’s a good thing for investors, it might be a discouraging development for those searching to buy individual companies at a discount.

Even in this kind of market environment, there are still investment opportunities, like this growth stock that’s trading 42% below its record high from February 2021. Should you buy shares with $10,000 right now?

Image source: Getty Images.

Leading the travel industry

From its founding 17 years ago to today, Airbnb (ABNB -1.24%) has become a $78 billion company (based on market cap) that dominates its industry. Growth has been the key driver of value. Revenue, gross booking value, and nights and experiences booked have soared over the years. The company currently has 5 million hosts and 10 million homes, showcasing its scale.

The growth has revealed just how profitable the business can be. Airbnb raked in $642 million in earnings during the second quarter, which translated to a strong net profit margin of 21%. This is a major improvement from the $576 million net loss posted in Q2 2020. The company also produces ample amounts of free cash flow.

Management has the confidence to keep pushing for more growth. Within the core rental operations, there is a big opportunity to further penetrate international markets, like Brazil, Japan, Germany, and India. Airbnb is also noticing that long-term stays, those that are for 28 days or more, are popular.

There are plans to become a comprehensive travel platform. Earlier this year, Airbnb introduced Services (like a personal chef, massage, or photographer) and Experiences (like a wine tasting, scenic hike, or yoga session), revamping its app in the process. “It’s still early, but we believe that services and experiences can become sizable businesses for Airbnb,” said co-founder and CEO Brian Chesky on the Q2 2025 earnings call.

These initiatives will require capital investments, to the tune of $200 million just this year, so investors shouldn’t be surprised if margins decline. However, they certainly expand the company’s total addressable market, even if they require patience from investors. Airbnb is putting itself in a position to drive more revenue from its guests over time.

Airbnb’s economic moat

Airbnb is putting up solid financial results, and investors should have confidence that this type of performance will continue into the future. That’s because the business has developed an economic moat that supports its staying power in the travel industry.

CFO Ellie Mertz said on the Q2 2025 earnings call that 90% of site traffic comes from “direct and unpaid” sources. In other words, Airbnb has built a powerful brand that people might immediately think of when they consider taking a trip. The company’s name is also regularly used interchangeably as a verb, highlighting the mindshare it has commanded among consumers.

Airbnb also benefits from a network effect. It’s a classic flywheel. More hosts with more listings provide travelers with more options, increasing the value the platform provides. And with more travelers searching on Airbnb for accommodations, hosts benefit by being able to target a larger audience. Even better, the network effect is global, not restricted to a specific city in the way ride-hailing services might be.

Time to buy the dip

Airbnb has underperformed the market in the past year, with shares up less than 3%. The market is rightfully worried about key risks, like the persistent threat of changing regulations in certain markets, with governments focused on supporting housing supply and cost of living within their borders. A possible recessionary scenario will also put a damper on growth, at least temporarily. These factors shouldn’t be ignored, but Airbnb deserves the benefit of the doubt.

Shares trade at a forward price-to-earnings ratio of 25. Given the company’s growth potential, high profits, and durable competitive strengths, Airbnb is worthy of a $10,000 investment right now.

Despite a difficult start to the year, Tesla (TSLA 2.27%) stock is now up by double digits in 2025. With a market cap of $1.3 trillion, however, many investors are wondering how much additional growth potential shares offer. Some analysts think that Tesla can become a $2 trillion business by the end of 2026. But there are some key risks to be aware of before loading up on Tesla stock.

Image source: Getty Images.

Tesla trades at a steep premium to Rivian and Lucid Group

The biggest risk facing Tesla right now is the stock’s premium valuation. Shares trade at a price-to-sales ratio of around 16. Other electric car stocks like Lucid Group and Rivian have stocks that trade between 3 and 7 times sales. According to this metric, Tesla trades at a 100% to 400% premium over the competition. That’s the case even though competitors like Rivian and Lucid have market caps under $20 billion, theoretically providing much longer growth runways versus Tesla’s $1.3 trillion valuation.

Of course, paying a high premium isn’t a problem if the company in question is growing fast enough to justify such a valuation. A company that trades at 16 times trailing sales, for instance, would trade at just 8 times sales one year from now if revenues grew by 100%. That is far from the case for Tesla, however.

This year, analysts expect Tesla’s sales to fall by around 5%. For comparison, Lucid and Rivian are expected to see sales grow by 61% and 6%, respectively. Next year, analysts do expect positive growth to return for Tesla, with 20% sales growth expected. But Lucid and Rivian are still expected to see higher sales growth than Tesla, with 93% and 33% expected sales growth, respectively.

So at least on a price-to-sales basis, Tesla shares trade at a hefty premium to both Lucid and Rivian even though its expected sales growth both this year and next year are below that of both companies. What’s up with that?

To be sure, competitors like Rivian and Lucid don’t have the scale or brand name recognition that Tesla does. But as mentioned, both also have arguably much more room to grow long term. The main differentiator is current or near-term growth, but long term growth potential in a new and exciting — but possibly overhyped — business segment: robotaxis.

Source: Getty Images

Robotaxis could become a $1 trillion business for Tesla

Analysts are very bullish on Tesla’s robotaxi dreams. The company launched a pilot version of its autonomous taxi service this summer in Austin, Texas. Additional cities like San Francisco may soon be on the way. Tesla CEO Elon Musk optimistically believes there could be 1 million or more Tesla robotaxi’s roaming the streets of America by the end of 2026.

How big could this business be for Tesla? Dan Ives, an analyst at Wedbush Securities, believes it could soon add $1 trillion to Tesla’s market cap. Cathie Wood, a high-profile, outspoken Tesla investor, believes the overall market could eventually be worth $10 trillion. Tesla is uniquely positioned to take on this market, with its large production facilities, multi-year investments in autonomous driving, and its sheer access to capital.

Even if Tesla’s robotaxi service stumbles in its first year — which many skeptics predict — the growth opportunity is clearly immense. And as mentioned, Tesla is uniquely capable of taking a leading role in this new industry. But as Reuters recently pointed out, “getting from dozens to millions of self-driving cars won’t be easy.” This should be viewed as a multi-decade opportunity for Tesla, not a near-term reality. Tesla’s bumpy rollout in Austin should be a testament to that fact.

Tesla’s stock price is reasonable for long-term investors who believe in the company’s robotaxi aspirations. But the premium is far too high for a simple EV manufacturer with smaller business segments in energy storage and generation. Tesla remains an exciting company to watch, but investors must be bullish on robotaxis over the long haul to justify a position.

Tech giants continue to announce more capital investment in artificial intelligence (AI) technology. Demand remains strong from large enterprises looking to gain better insights from their data using AI-powered services in the cloud.

Two companies that are benefiting from these trends are Alphabet (GOOG 1.27%) (GOOGL 1.23%) and Amazon (AMZN 0.23%). These companies are in a strong competitive position to bring AI innovation to consumers and enterprises, and better yet, their stocks are reasonably valued relative to their earnings potential.

Image source: Getty Images.

1. Alphabet 

Shares of Alphabet have surged in 2025 as investors begin to recognize Google as an AI juggernaut. Google’s Gemini AI model powers intelligent features across all the company’s services, including Search, Google Cloud, and other apps. With 2 billion people using services like Google Search and Gmail every day, that makes Google one of the top consumer brands profiting from AI.

Google Search is having a strong year, all thanks to AI. Search revenue grew 12% year over year in Q2. New features like AI Overviews and AI Mode are driving more search frequency and new use cases for Search that is fueling more advertising revenue.

On the enterprise side, Google Cloud is seeing tremendous demand for AI services. Businesses are migrating their data to leading cloud platforms to access AI-powered analytics and application-building tools. This drove an impressive 32% year-over-year increase in cloud revenue last quarter, while the segment’s operating profit more than doubled.

AI is also bringing internal improvements to Google’s operations, such as automating more than 30% of its code. This frees up time for Google’s engineers to work on new ideas that can speed up its product development. This has the potential to accelerate its growth over the next decade, which isn’t reflected in the stock’s valuation.

Management plans to spend $85 billion in capital expenditures in 2025, up from the previous estimate of $75 billion. This is to meet the growing demand for cloud and other services, signaling that Google’s future growth is undervalued.

Even after the recent climb, the stock still trades at a forward price-to-earnings (P/E) multiple of 23 based on 2026 estimates. This is attractive for an AI-first company that should deliver double-digit annualized earnings growth over the long term.

2. Amazon

Amazon is another tech juggernaut that would make a solid addition to any investor’s portfolio right now. Its financial results have been solid this year, with improving sales and profitability in its largest business, e-commerce. But Amazon is also the leading cloud services provider, which is raking in billions in annualized revenue for enterprise AI services.

Amazon Web Services (AWS) generates $116 billion in annualized revenue. This represents 18% of the company’s total revenue, but produces most of the company’s profit. While AWS is facing greater competitive pressure from Microsoft Azure and Google Cloud, it continues to sign major deals with global brands. Last quarter, AWS signed new agreements with PepsiCo, Peloton, and Warner Bros. Discovery, among others.

Demand for AI is so great it is stretching AWS’ computing capacity. Specifically, generative AI solutions are experiencing triple-digit year-over-year growth. This means as Amazon invests in bringing more compute capacity online, AWS revenue could accelerate in 2026.

AI is also benefiting Amazon’s e-commerce operations through more intelligent delivery routing, inventory placement, and faster order processing, with more than 1 million robots at its warehouses. This shows a valuable synergy taking shape where AI improves the efficiency of the e-commerce business, while higher revenues from e-commerce help fund more investment in research and development for AI innovation in cloud services.

In many ways, Amazon has become an AI-first business, making it a solid choice for investors looking for a relatively safe business to invest in AI for the long haul.

The stock is trading at a forward P/E of 30 times, using next year’s earnings estimate. This is reasonable for a business that just posted a year-over-year earnings increase of 33%, partly driven by AI-driven cost efficiencies in e-commerce. Analysts expect the company to deliver 17% annualized earnings growth, which could double the stock by 2030.

Stocks are at an all-time high, as there have been plenty of winners during the AI boom.

However, one sector has been left behind over the last couple of years. Housing stocks have generally been reeling with mortgage rates still elevated and existing home sales down roughly 30% since pre-pandemic levels. That has impacted everyone in the sector, from home builders to real estate agencies to home-furnishing companies, which depend on home sales to drive demand.

One company, RH (RH -3.60%), is still trading down 69% from its pandemic-era peak, as its business pulled back substantially in the post-pandemic era, even though it has since regrouped and is back to delivering solid growth.

The stock pulled back last week after the high-end home furnishings company formerly known as Restoration Hardware missed estimates and cut its full-year guidance. The stock fell 4.6% on the news, even though the numbers were solid considering the challenging macroeconomic environment.

Image source: RH.

Revenue rose 8.4% to $899.2 million, below estimates for $905.4 million. Demand, which is a measure of order growth, was up 13.7% in the period, even with the impact of tariff uncertainty and a weak housing market.

Despite the weaker-than-expected revenue growth, the company continued to deliver strong profit margins with an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of 20.6%, and a generally accepted accounting principles (GAAP) operating margin of 14.3%.

Adjusted earnings per share jumped from $1.69 to $2.93, showing its margins are rapidly expanding, though that missed the consensus at $3.22.

Why RH could soar

It will take a lot for RH to recover to its previous peak, which came at a time when the housing market was soaring and home-improvement stocks were delivering rapid growth.

However, considering it’s down 69% from its peak, RH doesn’t need to get all the way back there to be a winner. In fact, the Fed rate cut on Wednesday could be the trigger the company needs in the housing market.

CEO Gary Friedman hasn’t hesitated to blame what he’s called the weakest housing market in 30 years for the company’s woes, and lower mortgage rates are likely to bring more home buyers and sellers into the market. Lower rates will reduce monthly payments, and it will also encourage sellers to reenter the market as it will diminish the “lock-in effect” of the pandemic era.

As a high-end home furnishings seller, RH is well prepared to take advantage of the housing market recovery as home sales tend to trigger new furniture purchases.

The company has also expanded significantly in Europe and with new galleries in the U.S., in addition to new trial businesses like restaurants, guesthouses, and airplane and yacht charters.

While interest rate cuts in the U.S. won’t directly affect the business in Europe, its expansion across the pond shows there’s plenty of growth runway left for the company.

Is RH a buy?

Based on analyst estimates for fiscal 2027, which ends in January 2027, RH stock trades at a forward P/E of 18, which seems like a fair price for a stock that still has significant growth potential. Additionally, Friedman envisions expanding the brand beyond home furnishings, even flipping whole, fully furnished houses, effectively getting into the housing market, a program it calls RH Residences.

Even if mortgage rates decline, it could take time for the housing market to spring back to life, especially as the lock-in effect is likely to persist for at least some homeowners.

However, investing in RH looks like a good way to take advantage of the expected rate cuts. For risk-tolerant investors, getting some exposure to the stock right now looks like a smart idea.

The stock market is on a roll. As of this writing, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average are all at — or approaching — all-time highs. That said, there are still some stocks that have lagged the benchmark indexes.

Today, let’s take a look at one such name and why it may be lagging: Advanced Micro Devices (AMD -0.82%). And is this an opportunity now for investors?

Image source: Getty Images.

How Advanced Micro Devices’ stock has performed

First, let’s recap AMD’s recent performance. The stock has been on a roller coaster for much of the last three years. As you can see in the chart below, AMD stock soared from a low of around $56 to a high of $211 during a roughly 18-month run that began in late 2022.

Then, the stock gave back nearly all of those gains before regaining momentum about four months ago. However, after an impressive performance, AMD’s stock has seemingly run out of steam once again. All told, the stock is still up 31% year to date, although it remains about 25% off its all-time high.

AMD data by YCharts

What’s next for AMD

So AMD’s stock has been volatile. That much is clear. Yet, the company is one of the major players in perhaps the hottest sector of the economy: semiconductors. Granted, AMD isn’t in a position to dethrone Nvidia anytime soon — Nvidia’s artificial intelligence (AI) chips remain the preferred option for many AI developers.

However, AMD is gaining converts to its products. Just a few days ago, none other than Elon Musk praised AMD’s chips and noted that, “AMD is now working pretty well for small to medium sized models.”

That’s great news for AMD, which already has MI325 AI chips in production now, with plans to roll out more advanced MI350 chips in late 2025 and its most advanced MI400 slated for delivery in 2026. With these planned rollouts, AMD is aiming to directly compete with Nvidia and take meaningful market share of the red-hot AI chips market.

In response, Wall Street analysts are starting to raise their sales estimates. According to YCharts data, consensus estimates for AMD’s 2026 revenue have increased by nearly 8% over the last three months. Moreover, according to data compiled by Yahoo! Finance, analysts now expect AMD to generate $40 billion in revenue in 2026, up 22% on a year-over-year basis.

While AMD’s revenue still trails Nvidia by a mile (Nvidia will likely generate over $200 billion in annual revenue for the 12 months ending on Jan. 26, 2026), AMD is showing progress.

Suppose the company can continue to chip away at Nvidia’s lead. In that case, it can make meaningful progress toward establishing itself as Nvidia’s chief rival in the fast-growing market for advanced semiconductor design.

Is AMD a buy now?

Here’s the dilemma when considering AMD stock. Yes, the company is making an impressive push into the AI chips market, which could pay off handsomely in the next few years as its new MI350 and MI400 chips go into full production.

However, the company has lots of ground to make up. Nvidia’s projected sales of $200 billion for fiscal year 2026 demonstrate how far ahead it is in the race to control the AI chips market. Nevertheless, with the overall AI market growing by leaps and bounds, AMD’s stock is likely to advance steadily in the coming years.

In summary, investors should remain cautiously bullish on AMD stock. It is increasingly becoming an AI chip stock to watch, but Nvidia, for now, remains the king of the hill.

GitLab (GTLB 1.21%) quickly gained attention after its 2021 initial public offering (IPO) as one of the only pure-play DevSecOps companies, offering a single cloud-native platform for coding, security, and deployment. The stock then fell sharply during the 2022-2023 technology sell-off, witnessing a drawdown of about 80% from the peak.

Recently, GitLab’s stock has begun to recover, driven by the rising adoption of its artificial intelligence (AI)-powered DevSecOps platform. Yet shares still trade at about 63% below their all-time high, highlighting a cautious investor sentiment.

Image source: Getty Images.

Despite this, GitLab’s push in AI, security, regulated industries,  and public sector can dramatically push up share prices in the coming months. Here’s why.

AI-native strategy

GitLab has positioned itself as an AI-native DevSecOps company, embedding AI across the entire software lifecycle. The company’s AI-powered suite, GitLab Duo (integrated into its DevSecOps platform), is seeing rapid traction. Weekly usage of GitLab Duo has risen sixfold so far in 2025, although the starting customer base was small. Approximately 25% of this usage can be attributed to new customers, who got access to Duo features after they subscribed to either the GitLab Premium or Ultimate tiers.

Recently, GitLab launched Duo Agent Platform, now in public beta, to mainly target large enterprises. This lets engineers work with AI agents to build, test, secure, and deploy software — automating many tasks in parallel to boost productivity and shorten delivery times. Gitlab has noted that many coding assistants can produce code, but it is not always high quality and secure. Gitlab, however, has added privacy, security, and compliance guardrails to maintain standards for enterprise software development.

GitLab has also partnered with Amazon, Anthropic, OpenAI, Alphabet, and Cursor to enable their agents to operate inside its Duo Agent Platform and DevSecOps workflows. This gives customers flexibility to choose AI tools while remaining within GitLab’s secure ecosystem.

Besides developing a high-quality offering, the company is also focused on monetizing it effectively. With Duo Agent Platform, GitLab plans to change its pricing from purely seat-based subscriptions to a hybrid seat-plus-usage-based model. The company is planning for the general availability of Duo Agent Platform by the end of 2025, although it is a very ambitious target. While AI agent activity is expected to generate incremental revenues, the near-term impact may be limited.

Robust financial performance

GitLab’s recent financial performance has been healthy. The company’s revenues rose 29% year over year to $236 million, while non-GAAP operating margin was 17% in the second quarter of fiscal 2026 (ending July 31). Adjusted free cash flow hit $46 million, a dramatic improvement from $10.8 million in the same quarter of the prior year.

GitLab boasts a solid balance sheet with $1.2 billion in cash at the end of the second quarter, giving it the flexibility to fund innovation in AI capabilities, platform enhancements, and go-to-market strategy.

However, Gitlab’s fiscal 2026 revenue guidance seems to have disappointed investors. Management expects fiscal 2026 revenues between $936 million and $942 million despite surpassing consensus revenue targets in the second quarter. The company attributed this conservative stance to the ongoing changes in its go-to-market strategy and tightening budgets in the small and medium business (SMB) segment.

Other growth catalysts

GitLab’s main edge lies in its unified platform where every step of the software development process is tracked and monitored. This full life-cycle context helps improve the accuracy and reliability of the AI recommendations and tools on the platform. Additionally, being the only independent DevSecOps company that works across all clouds and AI vendors, Gitlab gives enterprises and government clients flexibility to choose vendors and tools most fitted for their use cases, thereby avoiding vendor lock-in.

Increasing shift of clients toward GitLab Ultimate, its highest-value tier, is also becoming a key driver for the company. This has been driven by customers wanting robust security capabilities with code development. Ultimate contributed 53% of annual recurring revenues (ARR) at the end of the second quarter, while 8 of the 10 largest deals in the second quarter also included Ultimate.

GitLab is also seeing strong adoption of GitLab Dedicated, its single-tenant software-as-a-service (SaaS) version of its enterprise DevSecOps platform. ARR grew 92% year over year to $50 million, with strong demand from financial services and the public sector. FedRAMP authorization for “GitLab Dedicated for Government” has also opened U.S. federal contracts, making regulated and sovereign workloads a major growth frontier.

All these initiatives are playing a crucial role in securing new high-value clients. The number of clients contributing ARR over $100,000 grew 25% year over year to 1,344 at the end of the second quarter. The company is also proving successful in cross-selling and upselling to existing clients, as evidenced by its dollar-based net retention rate of 121%.

Reasonable valuation

Despite these strengths, GitLab is trading at 9.4 times sales, lower than its three-year average price-to-sales (P/S) ratio of 13.7x.

With growing AI opportunities, an expanding client base, and strong financials, GitLab looks inexpensive relative to its potential. Investors willing to tolerate near-term volatility should consider picking a small stake in this stock now.

Global spending on information technology is expected to reach nearly $5.4 billion in 2025, driven primarily by the growing adoption of artificial intelligence (AI). This massive wave of investment is creating long-term opportunities for businesses that can scale with these digital shifts. Companies with robust competitive advantages and proven business models are positioned to benefit most from this trend.

Image source: Getty Images

As this trend accelerates, here’s why these two growth stocks can prove to be exceptional buy-and-hold picks for the next decade.

Meta Platforms

Meta Platforms (META 0.70%) remains a leading player in the social media and digital advertising landscape, and it’s now accelerating its investment in AI infrastructure to drive the next phase of growth.

Meta’s core business is a cash-generating machine that can fund future growth opportunities. In the second quarter of 2025 (ending June 30), revenues rose 22% year over year to $47.5 billion, with an operating margin of 43% and free cash flow of $8.5 billion.

It is indisputable that digital advertising remains the primary driver of growth. Meta is leveraging advanced AI technologies to enhance ad targeting and recommendations as well as user engagement across Facebook, Instagram, WhatsApp, and Threads, strengthening its digital advertising business.

The company serves over 3.4 billion daily active users and uses AI models, including Andromeda, GEM, and Lattice, to enhance ad conversions and pricing across its applications, resulting in stronger monetization.

Its push beyond its core apps into newer platforms may also begin to generate fresh advertising growth. Threads has already surpassed 350 million users, and ads are starting to appear across its feed. Advertisements are also being introduced in the status and channels features of WhatsApp. Business messaging is scaling, with U.S. click-to-message revenue up more than 40% year over year in the second quarter.

Meta is also rolling out subscriptions for WhatsApp channels — a feature that can help businesses connect with over 1.5 billion daily active users who visit the channels. Meta AI, a consumer-facing AI-powered assistant integrated into its app ecosystem, has already built a user base of over 1 billion monthly active users. Besides improving user engagement through personalized recommendations and enhanced content discovery, it can also become a new monetization avenue in the coming quarters.

The tech giant is aggressively investing to expand its AI infrastructure. Meta expects capital expenditures of $66 billion to $72 billion in 2025, with even higher figures in 2026 as it builds AI data centers to support advanced AI models. While this may affect margins and cash flows in the near term, the long-term payoff of leveraging in-house AI capabilities to strengthen the core business may be exceptionally impressive.

Meta’s shares trade at a rich valuation of nearly 28.5 times forward earnings. While the company’s growth to date has been awe-inspiring, this may be just the beginning of an AI-powered multiyear growth story. Hence, considering Meta’s scale, cash generation potential, and AI investments, the stock remains an attractive choice for the next decade.

Amazon

E-commerce and cloud computing giant Amazon (AMZN -0.74%) is also doubling down on cloud computing, advertising, and AI to fuel its next chapter of growth.

The company’s core business is strong, and it clearly has enough financial flexibility to fund future growth opportunities: Amazon’s revenue increased 13.3% year over year to $167.7 billion while operating income soared 31% year over year to $19.2 billion in the second quarter of fiscal 2025 (ending June 30). The company also reported trailing-12-month free cash flow of $18.2 billion at the end of the second quarter.

Amazon Web Services (AWS), the company’s cloud computing business, accounted for 30% of the global cloud infrastructure services market in the second quarter of 2025, up from 29% in the prior quarter. With 85% to 90% of global IT spend focused on the on-premises environment and enterprises increasingly shifting workloads to the cloud, there is huge scope for AWS to grow in the coming years.

AWS revenue grew 17.5% year over year to $30.9 billion in the second quarter. The business has now reached an annualized run rate of $123 billion.

AWS had a backlog worth $195 billion at the end of the second quarter, reflecting strong demand for Amazon’s infrastructure and AI services. AWS is giving customers the use of Nvidia‘s cutting-edge graphics processing units as well as its own custom chip, Trainium2, to ensure better performance and lower costs to clients running AI workloads.

Additionally, Amazon Bedrock (a fully managed service enabling clients to build and scale generative AI applications on AWS) is adding several leading large language models like Anthropic’s Claude and the company’s own model, Nova. 

Amazon’s e-commerce business is also speeding up, especially as the company leverages automation and robotics to improve cost efficiencies, which could boost margins. Faster delivery is becoming a significant competitive advantage in the e-commerce market. In the second quarter, the company delivered 30% more items on the same day or the next day in the U.S. than it had in the same period last year. The company is planning to expand this same-day and next-day delivery to over 4,000 smaller U.S. towns by the end of 2025.

Finally, advertising is fast becoming a major growth catalyst. Amazon’s advertising revenues grew 22% in the second quarter of 2025 to $15.7 billion. With proprietary shopping, browsing, and streaming data secured from its platforms, advertisers can optimize their efforts, leading to improved outcomes. Advertising is proving ever more effective on platforms such as its retail marketplace, Prime Video, Fire TV, Twitch, and live sports.

Despite the many tailwinds, Amazon’s shares trade at 34.6 times forward earnings, which is not cheap. But considering AWS’s growth, fueled by rising AI adoption and improving e-commerce and advertising businesses, the stock may be attractive to investors seeking long-term growth opportunities.