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Dutch Bros (BROS 6.46%) stock is finally getting some market love. It’s more than doubled in value over the past year, and it trades at a P/E ratio of 193. That’s expensive by almost any standard, but it’s not the only valuation ratio worth a look. The valuation could also be justified given the company’s growth prospects.

Here’s a deeper look.

Image source: Dutch Bros.

High growth, high profits for Dutch Bros

With performance as good as Dutch Bros’ has been posting since it went public in 2021, it’s surprising that it’s taken the market this long to take notice. It reliably reports high sales growth, and profits continue to rise. In the 2025 second quarter, revenue increased 28% year over year, while net income rose from $22.2 million last year to $38.4 million this year.

However, there were reasons the market was concerned until recently. It didn’t report its first annual profit until 2023. In addition, investors were worried about its chances when same-store sales growth was low, even in negative territory for a short time, and most of the increase was coming from price hikes.

Dutch Bros has moved way past that now. Earnings per share (EPS) increased from $0.03 to $0.34 in 2024, and from $0.12 to $0.20 in the 2025 second quarter year over year. Same-store sales were up 6.1% in the quarter, with a 3.7% rise in transactions.

More importantly, analysts expect EPS to increase about 350% over the next three years.

Data by YCharts.

There’s a lot of expectation here. Dutch Bros has a huge growth runway in opening new stores, and net income is following. While there’s some growth built into Dutch Bros’ current price, the opportunity is enormous, which is why it commands a premium valuation. As for other valuation methods, the forward one-year P/E ratio is a more reasonable 74, and the price-to-sales ratio is a very reasonable 5.

Napco Security Technologies (NSSC 4.26%), a leader in commercial and residential electronic security solutions, reported mixed results in its earnings release on August 25, 2025. Recurring Service Revenue (RSR) was a standout, but equipment sales and gross margins both declined year-over-year. Net income (GAAP) and diluted earnings per share (GAAP) also dropped. This quarter marked stabilizing trends in some areas but ongoing pressure in others.

Business Overview and Key Focus Areas

Napco Security Technologies designs and manufactures security hardware and software for commercial, industrial, and residential buildings. Its products include intrusion alarms, access control hardware, electronic locks, and monitoring platforms that support safety and communication needs.

The company’s most important focus lately has been on building up recurring service revenue, which delivers predictable, high-margin income. This service is tied to cellular connectivity subscriptions for things like security alarms and remote management. Innovation and R&D spending continue to support this shift, while cost efficiency from Dominican Republic-based manufacturing helps protect margins. Increasing sales to the school safety market and providing complete, integrated security solutions remain top priorities for the business.

Fourth Quarter Developments: Revenue Trends, Product Mix, and Margins

GAAP revenue edged up just under 1% from the prior year, reaching $50.7 million. Recurring Service Revenue stood out with a 10% increase to $22.4 million. This revenue comes from monthly or annual charges for services like StarLink radios, which provide cellular communication and alarm connection, as well as the newly launched MVP Access platform for cloud-based entry control. RSR now makes up nearly half of total sales and enjoys a gross margin of 91%—by far the most profitable segment in the portfolio.

In contrast, equipment sales—revenue from physical security products such as alarms and electronic door locks—declined 5% year over year to $28.3 million. The company did manage a 27% sequential gain in equipment sales versus the previous quarter, suggesting distributors may be starting to rebuild inventory. However, the full-year picture shows a notable 16% decline in equipment sales for FY2025. Management cited ongoing distributor “destocking”—meaning dealers bought less to use up old inventory—as a reason for weak hardware revenues in Q3 FY2025. This hurt overall gross profits, even as RSR improved.

Gross profit margin dropped to 52.8% from 55.3% compared to the prior year. The company maintained its industry-leading RSR margin at 91%. Selling, general, and administrative expenses grew, including higher R&D and legal costs. Net income fell 14 % to $11.6 million, while adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization—a measure of core operating performance) shrank 7.6 %.

Despite these profit headwinds, Napco made significant improvements in operating cash flow, which reached $53.5 million (GAAP) for FY2025, thanks to reductions in inventory. The balance sheet remains solid, with $83.1 million in cash and no debt as of June 30, 2025. The company also highlighted its use of cash for shareholder returns: during FY2025, it paid $18.6 million in dividends and spent $36.8 million on stock buybacks.

The quarter included the public launch of the MVP Access platform, a cloud-based system enabling remote and recurring management of building and door security. This product launch is important because it expands the recurring service base, which management hopes will soon surpass the 50% threshold of total revenue, compared to 48% for FY2025. Investments in R&D also increased, reaching $12.6 million for FY2025, or almost 7% of net sales—supporting a pipeline of new products and features.

Looking Ahead: Guidance and Investor Watchpoints

Management maintained its dividend at $0.14 per share, with no increase or decrease for the coming period. It did not provide specific sales or earnings guidance for fiscal 2026, only indicating optimism about improving hardware demand and ongoing strength in recurring services. Continued pressure on EPS and margins means recovery in hardware and cost control will be key areas to monitor.

Investors should watch for any major change in equipment order trends, progress in recurring service mix, and signs of margin stabilization in the coming quarters. With no formal forward guidance offered, visibility on the timing of a broader rebound in hardware sales remains limited. NSSC does pay a dividend, which was unchanged at $0.14 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

In this podcast, Motley Fool contributors Tyler Crowe, Lou Whiteman, and Rachel Warren discuss:

• OpenAI CEO Sam Altman’s comments about AI bubbles.
• Target and Estee Lauder under new leadership.
• Home Depot and Lowe’s in a race to own the building products space.

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 August 20, 2025.

Tyler Crowe: The AI market is in a frothy mood again, and there’s some big shake ups in retail. This is Motley Fool Money.

Welcome to Motley Fool Money. I’m Tyler Crowe, joined by longtime Fool contributors, Lou Whiteman and Rachel Warren. Second quarter earnings are coming to a close, but we still have some big companies reporting earnings and making some big management moves. Today, we’re going to cover management shakeups at Target and Estée Lauder and also some mergers and acquisitions activity in an arms race between Lowe’s and Home Depot. But before we begin with that, we’re going to start with everyone’s favorite family dinner conversation, which is, are we in an AI bubble? It’s been a driving force the AI story for much of the market in 2025. We’ve seen a lot of companies, more than double and post some incredible numbers so far this year, but it hasn’t been without hiccups. We had the DeepSeek crash, I guess, if you will, back in January, that sent markets into a tizzy. Then this week, I think it was actually over the weekend, OpenAI’s CEO Sam Altman actually said to reporters, and I quote, “Are we in a phase where investors as a whole are over excited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes.” Pretty bold and evocative statement from Sam Altman. In addition to those comments, we’ve seen some pretty sharp stock declines with some AI companies reporting earnings, and some of these darlings are down pretty considerably. Palantir is down almost 18% over the past week as of our recording, and CoreWeave the AI Data Center company is down 40% its reported earnings last week. Rachel and Lou, I want to toss this to you. Rachel, you can go first. What do you make of Sam Altman’s statement about AI and is the AI market looking bubbly to you?

Rachel Warren: I do think this was a really interesting comment from Mr. Altman, particularly given that OpenAI remains one of the most public and prominent players in the AI race. You remember many fears of an AI bubble hit a fever pitch earlier this year back when the Chinese start-up DeepSeek released their competitive reasoning model. They claimed that one version of their advanced large language models had been trained for under $6 million, and that’s compared to billions like OpenAI has spent. Then earlier this month, Altman said that OpenAI’s annual recurring revenue is on track to pass $20 billion this year, but they’re still unprofitable. Then the release of their latest GPT-5 AI model earlier this month, it wasn’t so great either, so much so that the company restored access to Legacy GPT-4 models for paying customers. I do think that we can trace some similarities to the dot-com bubble when you’re looking at the current AI boom. You have rapid surges in investment companies receiving massive funding rounds based on the potential of the underlying tech. Sometimes there isn’t a clear path to profitability. I do think that some companies might be getting a bit ahead of their skis in terms of valuation. But I think it’s important to underscore. AI is not just a blanket catch all term, even though it tends to be used that way. AI is everything from AI algorithms that are analyzing medical images to assisting doctors in faster and more accurate diagnoses to the AI that we see being used to control and automate robots and manufacturing, logistics and other industries. Major companies like Pfizer, Eli Lilly, Amazon, and others are incorporating AI into their everyday operations. The technology is real. It’s rapidly evolving, and it is here to stay. I think that’s the important point to remember.

Lou Whiteman: I think it’s so interesting because there’s what Altman said and the way the headlines have taken off with it the idea, we’re in a bubble, everything’s trouble. That’s not really what he said. We sometimes think of the word bubble and we think of worthless and think the same thing. We know that isn’t true. Some stocks can be in a bubble, but yet, there’s also something going on that’s creating something profoundly profitable, profoundly society changing over time. I think what Altman was trying to say is that, yes, some valuations are getting frothy, but, hey, investors, workers who might be getting poached by other companies, if things are frothy, if there could be winners and losers here, why don’t you want to just stay with one of the big winners, one of the big guns? I think he was talking to a specific crowd. I don’t think he was predicting gloom and doom.

Tyler Crowe: Certainly my take is, and I’ve said this before in other spaces, but the idea that the winner of AI has emerged, I think, is a little early. The best example I can give is Google, which emerged many years after Internet search had been a big thing with Yahoo, Netscape, Ask Jeeves, all these other options that have pretty much gone the way of the dinosaur, and I think we could see something relatively similar with late emerging opportunities, as well. Lou, when we think about opportunities and maybe a little bit from the lens I just mentioned, where are you seeing the opportunities for AI right now?

Lou Whiteman: Well, for one, back on the bubble thing, let’s just point out that we both had a dot-com bubble, and companies like Amazon emerged. Even if there is a bubble, valuations may be stretched, but there still will be long-term winners among the companies we’re talking about. For me, right now, it’s all about diversification, whether it’s Amazon or if it’s Apple or Microsoft and Alphabet, these are companies with a lot of ways to win, and AI is part of that. But take that versus a Palantir or CoreWeave where all of your eggs are in the AI basket. I would much rather be with a diversified company. I don’t really like the picks and shovels, though. I think these have gotten just as over valued or maybe even more so than some of the main players. I love the idea that we’re going to need energy, we’re going to need data centers. I think that’s all true, but I also think that that’s very priced in. If there is a bubble, I almost think it’s there and not just the big companies that are using it.

Tyler Crowe: Rachel, for investors who are trying to identify, like things with durable growth stories, durable advantages versus an AI hype play, how do you think investors should look at it as separating between the two?

Rachel Warren: I think, fundamentally, there needs to be a real business that’s underpinning that technology. Looking for companies that are solving tangible real world problems or maybe is being used to optimize existing processes, not just a company using AI for the sake of using AI. Then also when you’re looking at some of these businesses, are these AI applications providing clear value? How does a company plan to generate revenue from its AI business? Is this a sustainable model with potential for growth? Ultimately, I think, especially amid the AI boom where you’re trying to really separate the wheat from the chaff, so to speak, you need to be looking for companies with sustained revenue growth, healthy profit margins, and positive free cash flow, which suggests they’re generating enough cash to fund their operations and invest in their future AI growth. I think that’s why we get back to a lot of these major players like the Amazons and Alphabets, because there is a real business there, and they are incorporating massive revolutionary AI elements into their businesses which have remained the crux of their respective industries for decades.

Tyler Crowe: The AI story, I feel like we could go in so many different angles, but we are still in the midst of earning season. We’re going to move on, and coming up next, we’re going to look at two retailers who are looking to new leadership right now to turn their prospects around.

Target reported earnings earlier today that were well, less than great. Before we recorded this episode, we were planning on discussing Target’s earnings through the lens of tariffs because it’s been such a hot topic of lately. But then the company threw us a little bit of a curveball and announced that current chief operating officer Michael Fiddelke will be taking over the CEO spot from Brian Cornell, starting in February of 2026. Now, Target’s earnings did beat Wall Street’s expectations, but they were pretty low expectations to begin with, and it maintained its guidance for the rest of the year, and its stock was down 7% today as of this taping. What stood out to you in the earnings or the announcement of the CEO change? What can Fiddelke do to actually turn things around here?

Rachel Warren: I do think it’s important to highlight it. Target has a range of issues it’s facing right now, and they do predate the tariff environment. Some of these problems are related to the consumer, but a lot of Targets issues also go back to the waning days of the pandemic. We saw consumers pull back on expenditures as inflation increased, and they focused more on needs-based categories. There has been this real significant shift to value. In many cases, that has led consumers to competitors like Walmart. Targets also faced criticism and boycotts in recent years that have severely impacted sales, and it has yielded ground to competitors in key areas where it used to lead, HomeGoods being one vital category. As you noted, they just reported their Q2 sales and earnings. Net sales in the quarter were down 0.9% from a year ago, comparable sales fell 1.9%, operating income fell by 19.4%. They did see a 14% increase in non-merchandise sales. Their digital sales grew about 4%. Tariffs, of course, are likely to erode some of their profit margins. There’s also a very likely reality that they’re going to need to raise some prices, and that could impact consumer expenditures. Cornell will remain executive chairman, but I do think it’s clear that management is looking to right the ship, and they think that a new leader at the CEO helm is an important step. I do think Target can come back from this, but it’s going to require time and patience. Again, a lot of these issues predate what we’ve seen in its industry the last several months. One thing I’ll note, this is still a major dividend payer for investors, 54 consecutive years of dividend increases and counting. That might be one reason to look at Target on the dip right now.

Lou Whiteman: Can come back from it, but a big emphasis on can for me. I’m not ready to make a call, and I don’t want to be too scared here, but retail is full of seemingly just powerhouse brands that just suddenly disappear or lose their mojo. Again, I don’t know if that’s what’s going to happen to Target, but I think target investors have to be a bit worried here. Ask Cole’s investors, ask Sears investors, ask JCPenney’s investors. Big, well established brands can go from all as well to things go terribly wrong and not recover. I think, as Rachel said, this has been a long time coming. On the back end, you talk to Target suppliers, and they’ll say, we get dealing with two or three people a year. It’s just chaos. I’ll say this, I think Michael Fiddelke has a big task up ahead just to stabilize a business that doesn’t feel stable to me. I’m hopeful, but I don’t think it’s a slam dunk because guys, honestly, what does Target bring to the retail table that you can’t get somewhere else? What is their go to thing? I can’t answer that question, and if I was thinking of investing, that would really scare me.

Tyler Crowe: It is a tough question to ask, and at the same time, I don’t think it’s a coincidence that a lot of the retailers and brands and a lot of the companies we’ve been talking about have been struggling is coming in a pretty volatile post COVID world. I think a lot of companies have been shaken to their core and haven’t quite found their way out of the woods yet. In that same vein of new leadership, Estée Lauder reported its fiscal fourth quarter earnings today, as well. Sales were down 8% for the year. Net income swung to a huge loss, but a lot of that came from significant impairment and restructuring charges because new management came in and is looking to make significant changes. CEO Stéphane de La Faverie came in in January and took over for longtime serving CEO, as well as displacing the Lauder family a little bit, who have been tied to the C-suite, tied to the board. There was a little bit of corporate drama. I know the Wall Street Journal covered it pretty extensively coming up to that. But Rachel, I’m going to toss this to you. Do you think that this corporate shakeup that de La Faverie is proposing is going to really work, and will it allow Estée Lauder to get back on track to being a winning company that it was for as long as it was?

Rachel Warren: You’re right. This does have such an extensive history of being a winning company as one of the legacy players in the beauty space. I think the jury’s still out as to whether this turnaround will be effective. I do think that they still have a place in the industry, but it’s going to be an uphill battle. They are seeing sales declines across pretty much all of their core segments, and there are some very practical reasons for that. One being that Estée Lauder heavily and historically had relied on the Chinese market for growth, especially through tourist spending as well, and in European markets. But China in particular, their luxury market has experienced a significant slowdown, and that’s really impacted Estée Lauder sales, and a lot of their strategies through the years, which had been really successful in the past, have failed to resonate with the latest and youngest generation of beauty consumers, and it has become an increasingly competitive space in the years since Estée Lauder’s heyday. This is also a company that was slow to adapt to the shift toward online beauty sales and online shopping. We saw even competitors like L’Oréal that invested more heavily in online channels. Estée Lauder continues to face really fierce competition from other emerging beauty and skincare brands. One obvious example is e.l.f. which just acquired Haley Bieber’s brand Rhode and also owns many other key brands in the modern beauty space. Of course, now there’s the tariff factor that is compressing margins across the industry. Estée Lauder, they have had significant workforce reductions. They’ve been shifting their marketing strategy. They’ve been reevaluating some of their supplier relationships. But time will tell the environment they’re operating in now is very different than that of 15 or 20 years ago.

Tyler Crowe: In the age of TikTok, airport duty free seems a little outdated in terms of your dedicated sales model. Next up, we’re going to talk about Home Depot’s and Lowe’s who are taking a very different approach to slugged growth in the past couple of years. Does it ever feel like you’re a marketing professional just speaking into the void? Well, with LinkedIn ads, you can know you’re reaching the right decision makers. You can even target them by job title, industry, company, role, seniority, skills, company revenue, and did I say job title yet? Get started today and see how you can avoid the void and reach the right buyers with LinkedIn ads. To get 100 pounds off your first campaign, go to linkedin.com/lead to claim your credit. Terms and conditions apply. We just discussed two retailers looking to new leadership to shake things up, but home improvement retail has also been moving and shaking quite a bit in the past couple of years. But instead of fresh faces in the front of the C-suite, they’re actually looking to acquire their way out of a slump. Just today, when Lowe’s announced their earnings for the quarter, it was also announced it was buying building products distributor foundation building materials from a private equity company for about $8.8 billion. Now, this just comes a few months after Home Depot announced it was acquiring GMS, its second specialty building products distribution company in as many years. Now, Home Improvement retail has been in the dumps for a myriad of reasons of interest rates, COVID. You name your crisis over the past five years. I want to start with Lou this time. What do you make of these moves of moving into professional contracting specialty product distribution?

Lou Whiteman: Tyler, I can’t answer this without bringing up a third company, QXO, which is also trying to consolidate this industry. They, of course, are run by Brad Jacobs, who has consolidated the tool rental industry, has consolidated trucking, has consolidated waste. Whether or not QXO ends up being a success, I do believe Brad Jacobs knows how to identify a market ripe for a roll up. I have no idea if he assumed Home Depot and Lowe’s will goes aggressively in when he started QXO or if this is turning into a problem. But I do think if you look at there’s 75,000 very small little companies here. It’s fragmented the logic of a roll up and a logic for a Home Depot or Lowe’s to go in and try to roll up this industry. It’s there, and I think on paper, at least, it makes sense, whether it works for Lowe’s, whether it works for Home Depot, that we’ll have to see.

Rachel Warren: I think if you take a step back, this makes a lot of sense. First of all, it’s worth pointing out that Home Depot commands a much larger market share and significantly higher revenue than Lowe’s, and it has a more extensive store network. It’s historically really focused on serving professional contractors. Those represent something like half or about 45% of its sales, and Lowe’s needs to gain ground here. Its recent moves make sense. They also recently acquired a company called Artisan Design Group for $1.3 billion as they’re really trying to strengthen their presence in the new home construction market, expand their pro services. They have rolled out their total home strategy, where they’re looking to be a one stop shop for DIY as well as pro customers. But the reality of the environment in which Home Depot and Lowe’s are operating in remains, we know that high interest and mortgage rates have discouraged home buying and selling. Consumers are allocating their spending to other areas. I think that these are both, solid value driven businesses. Focusing on the pro market, I think is a right move for them. But I do think we’re going to continue to see sluggish growth figures unless and until the environment in which they’re operating starts to relax and we start to see growth again.

Tyler Crowe: It feels like the building products industry specifically has been a little bit of a small fish, or bigger fish eat smaller fish until another bigger fish comes along. Lou, I’m going to ask this last question. Is there enough room in this market for basically three giant sharks? I’m including three because you really pitched QXO so well. If Home Depot’s, Lowe’s, and QXO are all simultaneously looking at major roll ups, is there enough room for them to eat?

Lou Whiteman: There is enough in theory. My fear is what this does to pricing. Not all assets are created equal. I think I’d be surprised if Home Depot or Lowe’s wants to put too much more capital work here with these big deals they’ve done. I think that does provide a lane for QXO, but there’s a lot of work to be done. Not all assets are created equal, and it will be curious to see who makes the right decisions as far as capital allocation and who ends up with the right fortress asset at the end of the day when everything’s cobbled together.

Tyler Crowe: As always, people on the program may have interest in the stock 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 it’s not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check our [inaudible] . For Lou Whiteman and Rachel Warren, our production leader Dan Boyd and the entire Motley Fool Money team, I’m Tyler Crowe. Thanks for listening, and we’ll chat again soon.

The Dow Jones Industrial Average and S&P 500 indexes are both nudging lower today. Rocket Lab (RKLB 8.07%) stock, however, is moving decisively in the other direction. Shares of the launch services leader are shooting higher today thanks to the company’s announcement on Friday afternoon as well as investors’ growing confidence in development of the Neutron rocket.

As of 11:31 a.m. ET, shares of Rocket Lab are up 11%.

Image source: Getty Images.

Rocket Lab can take a step toward proving the naysayers wrong this week

Before the weekend, Rocket Lab announced that it’s increasing U.S. investments to grow semiconductor manufacturing capacity, which will shore up the supply chain for space-grade solar cells and electro-optical sensors for national security space missions. To help support the initiative, Rocket Lab has received a $23.9 million award under the CHIPS and Science Act.

The second catalyst pushing the space stock higher today is the company’s planned opening of the Neutron rocket launch complex in Virginia on Thursday. In February, Bleecker Street Capital released a short report on Rocket Lab that cast doubt on management’s timetable for the Neutron. Whereas the company projected mid-2025 for an initial flight of the new medium-lift reusable rocket, Bleecker Street Capital suggested that a first flight would be more likely in 2026.

On Rocket Lab’s second-quarter-2025 conference call, management affirmed its expectation that the first launch of the Neutron rocket will occur before the end of the year.

Is it too late to fly with Rocket Lab stock for space economy exposure?

Rocket Lab’s announcement regarding increased investments in semiconductor manufacturing is encouraging, as is the opening of the Neutron launch complex this week. The stock’s rise today, however, seems a bit of an overreaction.

A successful launch of the Neutron rocket will be a powerful catalyst for Rocket Lab stock since Neutron will be the only competitor to the Falcon 9 from SpaceX. Investors looking to mitigate risk, though, may want to wait for a successful debut of the Neutron rocket before buying Rocket Lab stock.

Since late afternoon Friday, the price of Shiba Inu (SHIB -3.47%) traded close to 7% lower, as of 11:53 a.m. ET today. There is no obvious reason behind the move, but the token is likely struggling along with the broader crypto market.

Crypto is always unpredictable

Coming off a dovish speech from Federal Reserve Chair Jerome Powell on Friday in Jackson Hole, many would have expected cryptocurrencies to be surging right now because the sector has historically benefited from lower interest rates.

Image source: Getty Images.

However, a Bitcoin whale over the weekend sold 24,000 Bitcoin, according to media outlets, triggering a “flash crash” that appears to be impacting the sector right now.

Whales are crypto investors that hold a large amount of any one token. A flash crash is an event that forces an asset price to fall very quickly. These are usually followed by recoveries, but can also trigger forced liquidations. Viewed as a bellwether for crypto, Bitcoin’s daily moves up and down tend to influence the entire sector.

What to make of Shiba Inu

Launched as a meme token in 2020, Shiba Inu has largely been viewed as a viral sensation, opposed to offering any real-world utility. The token launched as an ERC-20 token, meaning it was built on Ethereum’s network.

In recent years, the developers have added more depth to Shiba Inu, particularly through Shibarium, a Layer-2 blockchain solution that processes transactions off chain, and incorporates a burning mechanism, which will help decrease Shiba Inu’s massive supply.

While that’s certainly progress, I still find the token to be too speculative and lacking in real-world utility compared to peers. I would avoid Shiba Inu, or only invest a small amount that you don’t mind losing.

Shiba Inu (SHIB -4.30%) is often regarded as a meme coin rather than a reliable blue-chip cryptocurrency like Bitcoin (BTC -2.05%) or Ether (ETH -3.82%). It was created as a parody of Dogecoin (CRYPTO: DOGE), which itself was a parody of Bitcoin.

However, a $100 investment in Shiba Inu at its earliest trading price in November 2020 would be worth a whopping $2.35 million today. That millionaire-making rally was driven by its early association with Dogecoin, its listings on Coinbase and Binance, Elon Musk’s tweets about Shiba Inu dogs, and the broader buying frenzy in meme coins.

Image source: Getty Images.

That rally boosted Shiba Inu’s market cap to $7.3 billion, but it’s still tiny compared to Dogecoin, which is worth $32.6 billion. Shiba Inu’s price has also declined more than 40% year to date as elevated interest rates chilled the meme coin market, its network activity declined, and its “whales” (big investors) made fewer purchases.

That pullback could drive Shiba Inu’s investors to take some profits and buy more stable cryptocurrencies like Bitcoin, which has risen nearly 20% year to date. That would be a prudent move, but I think Shiba Inu might still be worth buying before 2026 for four simple reasons.

1. Shibarium’s expansion

Shiba Inu is a token that was minted on Ethereum’s blockchain. Ethereum is a proof of stake (PoS) blockchain that supports smart contracts — which can be used to develop decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. PoS blockchains also enable tokens to be “staked” (or locked up for interest-like rewards).

Since Shiba Inu was minted on Ethereum, it doesn’t have its own native Layer 1 (L1) blockchain. But in 2023, its developers launched Shibarium, a Layer 2 (L2) blockchain that offers lower gas fees and faster transactions than Ethereum’s L1 blockchain. It accomplishes that by bundling together transactions on Ethereum’s L1 blockchain, processing them “off-chain” on Shibarium’s L2 network at higher speeds, and returning them to Ethereum.

Shibarium allows Shiba Inu to be valued by the growth of its developer ecosystem, but its slower-than-expected expansion weighed down its price over the past year. To draw more developers to Shibarium, Shiba Inu added new developer tools and resources, developer-sponsored gas fees, and a revamped staking model to its network this July. If those efforts spur the development of more Shibarium-based apps, Shiba Inu’s price should stabilize.

2. The metaverse could support Shibarium’s growth

Earlier this year, Shiba Inu’s developers launched “SHIB: The Metaverse,” which houses over 100,000 plots of virtual land and accepts Shiba Inu as its default currency. This project is still in the early stages, but it might spur the development of other metaverse experiences, draw more developers to Shibarium, and encourage the adoption of Shiba Inu as a virtual currency.

3. The whales could wake up

Shiba Inu’s anonymous founder, Ryoshi, minted its entire supply of 1 quadrillion tokens prior to its launch. Today, it only has a circulating supply of 589.5 trillion tokens. It’s a deflationary token because it can only be “burned” (removed from circulation) instead of minted.

If Shibarium’s network activity warms up and Shiba Inu’s price rises again, its whales could burn more tokens to reduce its circulating supply and drive its price even higher. Among those whales, the top 10 wallets control roughly 62% of Shiba Inu’s circulating supply. The top 100 wallets hold about 77% of its total supply. If those big investors suddenly ramp up their purchases or burn trillions of tokens, its price could surge and draw in more investors.

4. Interest rates should decline

Lastly, lower interest rates should drive more investors back toward Shiba Inu and other meme coins. The Federal Reserve hasn’t cut its rates this year, but most analysts expect at least one or two rate cuts as inflation cools. Once that happens, Shiba Inu — which has more irons in the fire than many other meme coins — could soar again.

Should you buy Shiba Inu today?

Shiba Inu is still a speculative investment compared to Bitcoin and Ether, and it isn’t somewhere you should park your life savings. You need to keep your risk tolerance in mind, too. But if you want to take a chance on a volatile cryptocurrency that might deliver surprising gains over the next year, you should nibble on Shiba Inu today.

Warren Buffett’s incredible track record makes him one of the best investors ever. There’s no denying that. His successful ability at allocating capital has made Berkshire Hathaway a trillion-dollar business. It makes sense that the average investor might keep a close eye on what’s in its portfolio in order to find potential ideas.

As of Aug. 21, the conglomerate owned more than 605 million shares in a leading bank, a holding valued at $29 billion, making it Berkshire’s third largest position. While this financial stock has produced a total return of more than 118% in the past five years, Berkshire has been a notable seller in the past year or so.

So should you still buy shares right now?

Image source: Getty Images.

Operating from a position of strength

The business in Berkshire’s portfolio that investors might consider is Bank of America (BAC -0.10%). With $3.4 trillion in total assets, it’s the second-biggest bank in the U.S. based on this metric. Based on the company’s second-quarter financial performance, investors have reasons to be confident.

During the quarter, net revenue increased by 4% year over year. There was 7% loan growth. Net interest income was up for the fourth straight quarter. In a sign of credit quality, the net charge-off rate improved compared to Q2 2024. And the bank remains a leader in deposit gathering, with top retail market share.

Bank of America is a dominant financial services entity. Besides the factors already mentioned, one obvious reason why is because of how diversified its operations are. It has its hands in consumer and small business banking, corporate and investment banking, capital markets, and wealth management. If any segment comes under weakness, it can be offset by better results elsewhere.

Investors should follow in Buffett’s footsteps in the sense that they should try and identify businesses that have an economic moat, or durable competitive advantages that help them outperform rivals and new entrants. Bank of America fits the bill. Its massive scale gives it a cost advantage. And as is the case with banks, there are switching costs for customers.

Tremendous capital returns

During the second quarter, Bank of America generated $7.1 billion in net income. The business is consistently profitable. This setup allows management to return lots of capital to shareholders.

Bank of America bought back $5.3 billion worth of its own stock in Q2. And it paid out $2 billion in dividends. The current dividend yield of 2.29%, which is significantly higher than the S&P 500‘s 1.25%, provides a nice income stream.

Investors can expect the capital returns to continue. Bank of America just approved authorization for $40 billion in share repurchases. And in the past decade, the dividend has climbed 460%.

Taking a cautionary view

Valuation can have a notable impact on the returns investors achieve. Bank of America shares trade at a price-to-book (P/B) ratio of 1.3 today. This is higher than the trailing five- and 10-year average.

Additionally, investors have to think about the broader economy. For what it’s worth, there’s always a certain level of uncertainty. And no one has any clue what interest rates are going to do, although there is a view that they will come down. Regardless, there’s always the threat of a looming recession, which would negatively impact Bank of America and the industry at large. This is something bank investors can’t ignore.

The fact that Buffett and Berkshire have been selling could be an ominous signal. And maybe it’s best if investors avoid Bank of America right now. That perspective could change if the valuation was much more compelling, like at a P/B multiple below one.

Uwharrie Capital (UWHR -0.98%), a community-focused bank operating mainly in central North Carolina, reported its latest quarterly earnings on August 22, 2025, announcing its second quarter results. Net income (GAAP) was $2.8 million, a 27.3% rise (GAAP) from the year-earlier period, and diluted earnings per share (GAAP) of $0.38, representing 31.0% growth compared to Q2 2024, as the company saw broad-based gains across net interest, noninterest, and mortgage banking income, and highlighted improved profitability. Overall, it was a quarter of steady top- and bottom-line growth amid a continued focus on expanding the loan book, deposit base, and earnings power.

Company Overview and Focus Areas

Uwharrie Capital is a bank holding company with a deep emphasis on serving local communities in North Carolina, particularly in Stanly, Anson, Cabarrus, Randolph, and Mecklenburg Counties. Its business centers around traditional community banking — providing checking, savings, commercial lending, and mortgage services to individuals and small businesses. The company’s approach relies on building long-term customer relationships with an emphasis on service, local knowledge, and personalized decision-making.

Key factors for its continued success include maintaining a strong community presence, staying current with technological advances, and navigating the complex regulatory requirements that shape the banking industry. Ongoing attention to the economic conditions in its service regions also plays a central role in its strategy.

Quarter Highlights: Growth, Product Trends, and Expenses

The latest quarter saw net income climb to $2.8 million, up from $2.2 million last year. Earnings per share (GAAP) increased to $0.38, a 31% improvement. Mortgage banking, which encompasses services like originating and selling home loans, rose 44.3% year over year for the six months ended June 30, 2025.

Total loans reached $687 million, rising 7.2% from June 30, 2024, while total assets measured $1.17 billion, up 4.1% from June 30, 2024. On the funding side, deposits increased to $1.06 billion, supported by steady inflows across demand, savings, and time deposit accounts. Savings balances grew 7.8% from June 30, 2024 to June 30, 2025.

Net interest margin, representing the difference between interest earned on loans and paid on deposits as a percentage of average earning assets, climbed to 3.56%. Noninterest income (GAAP) rose 38.5% compared to Q2 2024, reflecting a significant jump in mortgage-related activities.

Salary and benefit costs were up 11% compared to Q2 2024, “other operating expenses” rose nearly 58% compared to Q2 2024. The provision for credit losses was $254,000, down from $431,000 in Q2 2024. No noteworthy one-time events or items affecting results were disclosed in the release. The company did not announce a change in its dividend for the quarter.

Business Strategy, Technology, and Market Context

Uwharrie Capital highlights its community engagement initiatives, including a focused effort in April for Community Banking Month. According to management’s direct statement, its “concentrated effort reaffirmed our deep commitment to service and civic engagement.”

On the technology front, the company did not provide updates on new digital products, internet banking systems, or service upgrades in this period. Although previous public statements have highlighted a goal to adapt technologically, the lack of detail on this front in the latest earnings is notable, especially as competition from larger banks and fintech companies increases. Regulatory compliance also received little attention in the report, although the bank’s strong capital position supports ongoing regulatory health. No issues or new compliance initiatives were cited.

Credit quality indicators, such as the proportion of nonperforming loans or charge-off rates, were not reported in the earnings release, and without specific data, it’s difficult to form a complete view of underlying risk. Book value per share rose to $7.81, a 36% jump from 2024.

Peer comparison data places Uwharrie Capital as the 14th ranked bank nationally (under $2 billion in assets) by the American Bankers Association, suggesting the bank is performing well compared to similar-sized peers. However, the absence of information about new product rollouts, technology investment, or strategic differentiation could pose challenges amid a highly competitive environment.

Looking Ahead: Outlook and Investor Considerations

The company did not offer an earnings outlook or financial guidance for the rest of 2025. There was no projection provided by management regarding expected growth trajectories for revenue, loans, or profitability. The release contains broad statements about “growing with purpose” and focusing on core values but lacks specific forward-looking targets or quantified commentary.

Investors will want to watch upcoming quarters for more transparency on the bank’s approach to technology, further detail on its expense growth, and sharper disclosures on asset quality. Monitoring net interest margin and loan growth will also be key to tracking progress throughout the rest of the year.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

It’s been a disappointing year for these two companies. As of Aug. 21, Block (XYZ 6.78%) shares have tanked 13% in 2025. PayPal (PYPL 3.43%) has fared worse, with its shares down 21% this year. If that weren’t bad enough, both are trading more than 70% below their all-time highs, a gut-wrenching reality that might scare most investors away.

But to be clear, both companies have positive attributes. Between Block and PayPal, which is the better fintech stock to buy?

Image source: Getty Images.

Block’s two ecosystems continue to grow

Block operates two successful ecosystems that can be viewed as separate businesses. Square posted 11% gross profit growth last quarter (Q2 2025, ended June 30), offering tools and services to merchants. Cash App, which serves individuals, is growing at a faster clip. And it has 57 million monthly active users.

The business continues to innovate to drive further growth. For instance, Square AI gives merchants access to valuable data insights. And Cash App Borrow, a short-term lending product, saw originations rise 95% year over year. Block’s expansion playbook is focused on introducing new products and services to bring more merchants and consumers into the fold. Then it’s about boosting use and monetization.

Looking ahead, it’s clear that Bitcoin will slowly become a bigger factor in Block’s success. Founder and CEO Jack Dorsey is very bullish on this crypto. And he has overseen new projects, like the development of a hardware wallet and mining equipment, to further accelerate Bitcoin’s adoption. Should the digital asset continue on its impressive trajectory, this could be a boon for Block over the long term.

PayPal has long been a leader in digital payments

PayPal has a presence in more than 200 countries across the globe. It handled $443 billion in total payment volume in the second quarter (ended June 30). And it counts 438 million active users. This scale demonstrates just how important PayPal is in the world of online commerce. And with its two-sided platform, PayPal benefits from a network effect.

But the company has dealt with slower growth in recent years, which prompted a leadership change. Alex Chriss, who has been CEO since September 2023, is doing a good job so far of righting the ship. He has brought innovation back to the forefront.

For instance, a key recent initiative is PayPal World. Set to launch later this year, it’s a global platform that will connect different digital wallets and payment systems. This could provide a more seamless experience. PayPal also has its own stablecoin, called PYUSD, to lower costs and speed up transactions.

Under Chriss, PayPal is also better monetizing its Venmo segment, which essentially competes directly with Block’s Cash App. Venmo is trying to become more than a peer-to-peer payment service, for example, with its very popular debit card. Venmo posted greater-than-20% revenue growth in Q2, better than that of the company overall.

Despite the stock’s performance, PayPal operates from a position of financial strength. Earnings per share calculated according to generally accepted accounting principles (GAAP) soared 20% in Q2. Free cash flow is expected to be $6 billion to $7 billion for the full year.

The final verdict

There’s no denying that both of these companies have established themselves as powerful forces in the fintech industry. Block operates with a bigger presence in physical commerce, while PayPal leads in online payments. Nonetheless, both of these businesses face a lot of competition.

Investors who have a higher risk tolerance might want to consider Block. The company’s focus on Bitcoin activities adds upside, but it also introduces uncertainty, as ultimate success isn’t guaranteed. On the other hand, investors who want to own a financially sound digital payments powerhouse will favor PayPal. The company’s much cheaper forward price-to-earnings ratio of 12.9 is also hard to overlook.

And, of course, those who want more exposure to the fintech space could choose to own both of these stocks.

At one point, I owned seven rental properties. Today, I’m down to just one (and I’m getting ready to sell it soon).

No more tenants, no more maintenance calls, and no more juggling spreadsheets and 5,000 receipts at tax time… I’m moving all my money into one low-cost index fund strategy that’s easier to manage and way less stressful.

I’m not saying real estate isn’t a good wealth-building tool. It’s worked out well for me.

But I learned (the hard way) that passive income isn’t always passive. Here’s the backstory and my plans moving forward.

What drew me to real estate in the first place

Fresh out of high school, I was eager to build a real estate empire.

My original plan was to buy 10 solid rental properties, each cash flowing around $1,000 per month. That would give me a cool $10,000 per month in income — enough to retire early and live life on my terms.

And honestly, as vague as that plan was, it made a lot of sense at the time.

I worked hard to save up down payments, slowly bought properties, and actually enjoyed the process (mostly).

Not every property I bought was a slam dunk. But I definitely found and experienced many of the benefits I was chasing. I built equity, earned decent cashflow, and took advantage of real estate tax perks.

But eventually, the cracks started to show.

The downside nobody warns you about

If you’ve ever owned rentals, you know: the spreadsheets don’t tell the full ownership story.

They don’t show leaks under the kitchen sink. Or the three-month turnover delay because your contractors ghosted you. Or the multiple tenants who stopped paying right after moving in.

Some properties ran fine for many years. Then in a single 12-month period all of the profits would get wiped out by a perfect storm of emergencies.

True story — I had this one rental that was amazing for three years straight. I always got paid on time, and never heard a peep from the tenant… Then one day out of the blue I got a phone call from a lawyer. Turns out my tenant was a “lady of the night,” using my apartment as a place of business for illegal services.

Property managers helped me manage everything. But they are costly. And at the end of the day, the responsibility always falls on the owner.

With each place I bought, my stress grew. Even when things were going well, there was always a low-grade sense of stress in the background.

My new strategy: Index funds

I made it up to seven rentals, then I decided maybe I was climbing a ladder I didn’t want to be at the top of.

So I’ve been slowly exiting real estate ever since — selling one place at a time. I began with the trouble-maker properties first, keeping the higher performers longer. And now I’m down to just one single property left.

In my early 30s, I stumbled into index investing. It was something I hadn’t taken seriously before. I’d always known what index funds were (wide market exposure, low fees, blah blah blah). But I didn’t realize how freeing they could feel until I actually tried it.

I’ve now moved most of my money into a total stock market index fund. And it’s been one of the best financial decisions I’ve made.

I use Fidelity as my main broker. And I’ve been with them for over a decade now. Between my personal accounts, retirement funds, and custodial accounts for my kid and nephews, I’ve got 11 accounts with Fidelity… and I pay $0 in fees. Read my full gushing review of Fidelity here, all about why I’m a big fan.

Passive income that’s actually passive

I now keep most of my investments in total market index funds like FZROX (Fidelity ZERO Total Market Index Fund) and VTI (Vanguard Total Stock Market ETF).

These funds own thousands of companies across nearly every sector. I don’t pick individual stocks or worry about trying to outperform. Average returns are fine with me.

And the best part is, I don’t have to manage anything. It’s truly passive.

Here’s why I’m a big believer in index funds:

• Built in diversification — I’m invested across all industries, and own pieces of all the big and small publicly traded companies out there.
• Liquidity when I need it — I can sell just a small slice of my index funds at any time, unlike real estate where I’d have to offload an entire property just to access cash.
• Low fees — FZROX literally has a 0.00% expense ratio, so I love that fund. But most index funds have a tiny expense ratio compared to managed funds. Also most brokers have no trade fees when you buy or sell.
• Hands-off — The only thing I have to do is not mess with it.
• Strong historical returns — Large index funds like the S&P 500 have averaged ~10% annually over their long history.
• Mental clarity — I don’t get wrapped up in the headlines or have to think about my investments daily.

Even during the COVID-19 pandemic when my index funds were down 30%-40%, I was actually stressing about my rental properties more than I was about the stock market.

Thankfully, both rebounded after 2020. But that experience reinforced something big:

I’d rather hold an asset that can drop 40% without me having to lift a finger, than one that drops 10% and demands all my attention (or seven that demand attention).

Onwards and upwards

Seven rentals taught me a lot. But once I shifted my mindset away from “owning stuff” and toward growing wealth simply, index funds just made more sense.

I’ve reclaimed my time, simplified my financial life, and stopped managing my investments — and finally started enjoying what they’re doing for me.

It’s not too late to switch strategies, simplify your approach, or start fresh. Index funds are a great place to begin.

Check out our favorite online brokers and trading platforms for index investing (and more) — with low fees, no account minimums, and no stress.

SpaceX is one of the best-known companies in the world. It is privately valued at an estimated $400 billion, with a lot of that market value coming from its fast growing satellite internet service called Starlink that has a reported 6 million customers and is growing rapidly. But what if there was a company about to disrupt Starlink’s entire business model?

Enter AST SpaceMobile (ASTS 4.65%). This satellite internet upstart has innovated to eliminate the need for clunky terminals to connect devices to the internet directly from satellites. Its shares are up around 100% already this year, with its service set to become operational within the next few quarters.

Let’s dive into the numbers and see what potential AST SpaceMobile stock has for investors going forward.

No terminal, no problem

Satellite internet services like Starlink are great, but they come with one big drawback: clunky terminals. The standard dish is not ginormous, but is not something you could take out on a hike. AST SpaceMobile plans to get rid of the terminals altogether with its constellation of ultra-large satellites that can beam high speed internet directly to smartphones.

This would be a stepchange in customer value for satellite internet, and could lead to two outcomes. One is more people willing to pay for satellite internet, and two is existing customers of Starlink and equivalent services switching to AST SpaceMobile with its direct-to-device technology.

As it launches more of its satellites, AST SpaceMobile expects to turn on its service in the United States and then grow to Canada, the United Kingdom, and Japan throughout 2026. It will take steady launches of these large satellites, but eventually AST SpaceMobile has a path to true global coverage with direct-to-device internet.

Image source: Getty Images.

A huge global opportunity

Direct-to-device satellite internet could be a game changer for tens of millions of customers. The market opportunity includes geographically remote workers, hikers, fire service workers, people who work on commercial boats, and cruise ship passengers. It does not need to replace existing telecommunications infrastructure (at least, not today), but can be the perfect add-on to fill in the gaps in service.

This is why AST SpaceMobile has partnered with numerous telecommunications companies around the globe like Verizon Communications, giving it access to 3 billion potential customers. AST SpaceMobile will sell this service as an additional plan through the existing wireless contract relationships, and then sharing revenue earned with these telecommunication partners.

Revenue generation potential is immense once the AST SpaceMobile constellation goes global. For every 1 million customers who sign up at an estimated $10 a month, that is $120 million in revenue potential. If just 3% of the global addressable market signs up for AST SpaceMobile’s satellite internet service at any one time, that is 90 million customers and potentially $10 billion in revenue. The company also has contracts that it will deploy with the U.S. military, which should lead to even more sales growth.

Can AST SpaceMobile keep soaring?

Having 90 million customers is a greenfield scenario for AST SpaceMobile, and is not going to happen anytime soon. It will take years to build up the constellation to full capacity, as well as for telecommunications partners to market the add-on service to their customers. But the potential is there for AST SpaceMobile to disrupt a fast growing and lucrative sector in satellite internet, if it can execute on its growth plans.

At a market capitalization of $16 billion today, AST SpaceMobile looks cheap relative to the estimates laid out above. However, investors need to remember that this is a company generating zero revenue at the current moment and burning a boatload of cash each year. A lot can go wrong with its launch partners, like the recent delay from the India Space Agency that may keep some of its satellites from launching later this year. Even if things go all according to plan, it may be a decade before AST SpaceMobile starts posting a profit and gets to revenue and earnings figures that would make the current market capitalization reasonable.

If you have faith that AST SpaceMobile can hit $10 billion in revenue and fully disrupt the satellite internet market, then the stock will likely keep doing well for investors who buy today. Just remember there are always downsides when investing in highly risky companies like AST SpaceMobile.

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As investors digested the news of a potential rate cut from the United States’ Federal Reserve in the coming months, European markets saw a correction on Monday morning. Benchmark stock indexes dipped into negative territory except for the FTSE 100, which remained closed because of a bank holiday in the UK. 

The Dax in Frankfurt lost 0.4% soon after the opening, the CAC 40 in Paris dipped by 0.6%, the Madrid IBEX 35 was down by more than 0.4% and the European benchmark STOXX 600 decreased by 0.3% after 10.00 CEST. 

At the same time, the euro was slightly down against the US dollar, with the exchange rate at 1.1707.

Turning to market outliers, Danish energy company Orsted shares saw its shares fall to a record low, losing more than 17% of their value in Copenhagen. This came after the US administration halted the company’s offshore wind farm construction project called Revolution Wind on Friday, raising alarm among the company’s investors.

Meanwhile, JDE Peet’s shares soared more than 17% on the news that Keurig Dr Pepper would buy the Dutch coffee company in a €15.7 billion deal.

Asian trade followed US rally

The movements followed a cheerful trading session in Asia, where shares advanced on Monday, tracking Wall Street’s rally after the head of the Federal Reserve hinted that interest rate cuts may be on the way.

Fed chair Jerome Powell said on Friday at an annual conference in Jackson Hole, Wyoming, that he is aware of risks to the labour market — which could prompt faster rate cuts.

A surprisingly weak report on job growth this month has led many traders to expect a cut as soon as the Fed’s next meeting in September, after months of pressure from US President Donald Trump for lower rates.

Hong Kong’s Hang Seng index jumped 1.9% by the close, and the Shanghai Composite index surged 1.5%. The latter is trading at its highest level in a decade, despite worries over higher tariffs on exports to the United States under Trump and weak domestic demand at home.

Tokyo’s Nikkei 225 gained 0.4%, and the Kospi in South Korea climbed 1.3%. 

“Asia is set to rally in catch-up mode, feeding off Wall Street’s Friday rebound after Powell cracked the door open to rate cuts,” Stephen Innes of SPI Asset Management said in a commentary.

In other dealings on Monday morning, US benchmark crude oil gained 0.4% and was traded at $63.92 per barrel at around 11.00 CEST, while Brent crude, the international standard, added 0.25% to $67.39 per barrel.

The US dollar rose to 147.24 Japanese yen from 146.88 yen. 

Gold prices inched lower, by 0.2% to $3,410 an ounce. 

What to look out for this week

Nvidia’s earnings report, due on Wednesday after markets on Wall Street close, is a key focus of attention this week.

The firm’s role as a key supplier of chips for artificial intelligence, along with its heavy weighting, give it outsized influence as a bellwether for the broader market.

In Europe, inflation figures from France, Germany, Italy and other key European countries will be released on Friday.

Dividend investing can be tricky, since income-focused investors want to find high yields while also avoiding stocks that end up cutting their quarterly payouts. There’s a balance that has to be found, and company quality is highly important to consider. That’s why you should be interested in dividend-paying healthcare stocks like Johnson & Johnson (JNJ 0.08%), Medtronic (MDT 1.66%), and Omega Healthcare Investors (OHI -0.38%).

If you have $500 in available cash (or $5,000) that isn’t needed for an emergency fund, to pay monthly bills, or to lower short-term debt, you might want to consider using it to buy and hold one of these dividend stocks (or maybe all three). 

1. Johnson & Johnson is a Dividend King

Johnson & Johnson’s big draw right now is two-fold. First, it has increased its dividend annually for more than 50 consecutive years, making it a Dividend King. Second, its 2.9% dividend yield is well above the 1.2% of the broader market and the 1.8% of the average healthcare stock. But the big story for buy-and-hold investors is really its business.

Johnson & Johnson is an industry leader in both the pharmaceutical and medical device niches. It has a global reach and industry-leading research and development (R&D) chops, making it a valuable partner to medical professionals around the world. The business will wax and wane over time, since R&D success can be lumpy. But it has a proven record of, eventually, either finding its own new blockbuster product or buying smaller peers that have novel product candidates.

There are some concerns right now about litigation around talcum powder to worry about, but if you don’t mind some near-term uncertainty, this high-yield and diversified medical giant is worth a deep dive. A $500 investment would buy you roughly two shares, with $5,000 allowing you to buy 27 shares.

Image source: Getty Images.

2. Medtronic is closing in on Dividend King status

Medtronic has a similar story to Johnson & Johnson, except that Medtronic is focused on just medical devices. That said, Medtronic is diversified across the cardiovascular, neuroscience, medical surgical, and diabetes niches. It has 48 years’ worth of dividend increases under its belt, and its 3% dividend yield is high relative to the market, the healthcare sector, and its own yield history. That last comparison suggests that Medtronic’s shares are on sale today.

There are some reasons for that, with the company only now coming out of a period in which it didn’t introduce many new products. Investors are in a wait-and-see mood, noting that rising costs have also put pressure on the company’s profitability. But new products are starting to gain traction, with demand for its new cardiac ablation products pushing that business segment’s revenue up nearly 50% year over year in the second quarter of fiscal 2026.

Management is working to improve margins by focusing on the company’s most profitable businesses. On that score, the company is spinning off its diabetes business in 2026, a move that is expected to immediately boost earnings.

A $500 investment will get you around five shares of Medtronic, and $5,000 will allow you to buy 55 shares. Either way, you’re still getting in early on the business upturn that’s starting to take shape right now.

3. Omega Healthcare is still standing tall

Johnson & Johnson and Medtronic are both appropriate for risk-averse investors. Omega Healthcare involves a little more risk. This real estate investment trust (REIT) is focused on owning senior housing, a property niche that took it on the chin during the early stages of the coronavirus pandemic. But, while some other senior housing REITs were cutting dividends, Omega stood behind its payment. It didn’t increase the dividend, mind you, but it didn’t cut the dividend either, showing that it understood just how important that dividend is to shareholders. The yield is currently an ultra-high 6.4%.

The good news here is that the world has moved past the worst of COVID-19, and the age wave that is cresting into retirement is already pushing a strong recovery in Omega’s core business. Funds from operations (FFO), which are like earnings for a REIT, rose nearly 8% year over year in the second quarter of 2025. The company is again starting to invest for the future, making over $500 million in new investments in the quarter.

With Omega’s business on the mend, the massive size of the baby boomer generation suggests that the future is going to be bright. You can buy roughly 11 shares with $500, or 119 with $5,000.

A high yield needs a strong business

The big story here is that Johnson & Johnson, Medtronic, and Omega have all proven resilient to adversity over time. The long history of dividend hikes backs that up at the first two companies, and Omega’s ability to hold the dividend line through the pandemic proves its dividend bona fides. If you have $500 (or $5,000) to invest in dividend stocks today, any one of these healthcare stocks could easily find a home in your portfolio.

If buying Tesla (TSLA 6.18%) is indeed going to set an investor up for life, then its robotaxi business will have to be successful, and CEO Elon Musk will have to achieve his aim of making unsupervised full self-driving (FSD) software publicly available. While it’s uncertain if those things will happen, there’s one trend in the electric vehicle (EV) industry that significantly strengthens the case for Tesla. But to understand it, it’s important to start by addressing one key issue.

What’s going wrong with Tesla’s electric vehicle sales?

Musk is a divisive figure, but he’s not the only CEO to attract controversy or take positions that some find disagreeable and others find enlightened. This isn’t the place to enter that debate, but it is the place to look at matters rationally. A standard narrative has it that Tesla’s declining electric vehicle sales in 2025 are a consequence of Musk’s political involvement. If this were the case, Tesla would, indeed, have a major structural issue that definitely wouldn’t make it a stock to buy in hopes of it putting you on easy street. 

My opinion is that the evidence for this argument is weak. Tesla doesn’t have a sales problem because of Musk. It has a Model Y problem, and it has an interest rate problem. Let’s put it this way: According to Cox Automotive’s Kelley Blue Book report, sales of Tesla’s Model Y (its best-selling sport utility vehicle, or SUV) were down more than 24% in 2025 year to date through mid-July compared to the same period in 2024. In contrast, sales of its second best-selling car, the Tesla Model 3 (a mid-size sedan), rose almost 38% on the same basis.

If anti-Musk sentiment were behind the sales drop, that would show up for both models. Something else is going on. 

Competition is coming for Tesla

More likely, it’s the fact that other automakers have developed SUVs at price points that are highly competitive to the Tesla Model Y, even though many of them continue to lose significant amounts of money on EVs. Examples of SUV EVs gaining market share in the U.S. are Chevrolet’s Blazer and Equinox, Nissan’s Ariya, Hyundai‘s Ionic 5, and Honda‘s Prologue.

Image source: Getty Images.

General Motors‘ (NYSE: GM) Chevrolet is a case in point. Earlier in the year, GM Chief Financial Officer Paul Jacobson said, “We achieved variable profit positive on our EVs in the fourth quarter.” This is a good step, but it only means that revenue from its EVs covers the cost of labor and materials to build them. That’s fine if GM is going to make the same model in perpetuity. It’s not fine if GM is going to spend on research and development, factories, and other capital investments to develop a new car.

In reality, what’s happening to Tesla is a textbook example of new entrants driving down the sales and margins of an established industry leader by building loss-making vehicles with the intent to build the scale and market presence to turn profitable at some point.

As such, Tesla’s margins are being squeezed by a combination of competitors entering the SUV EV market and by ongoing relatively high interest rates — it’s not a coincidence that its well-performing Model 3 is its cheapest model.

Data source: Tesla.

It’s also not a coincidence that Tesla’s response to these conditions is to create a long-awaited, low-cost model, which is “just a Model Y” according to Musk.

What it means for Tesla investors

The key to Tesla’s future is the robotaxi and unsupervised FSD. Both are subject to debate, and Tesla remains a high-risk/high-reward stock that won’t suit most investors.

But here’s the thing. The profitability challenges inherent in EVs, combined with the difficulty of producing low-cost, affordable EV models at a profit for all automakers, strengthen the idea that robotaxis and ride-sharing have a big future as a solution to the problem.

EVs tend to have high upfront costs, but low operating and maintenance costs. Therefore, their most economically productive use could turn out to be as robotaxis, where they are heavily utilized to take advantage of their low running costs and justify their upfront price tags.

As such, if the future is EVs, whether by personally owned cars or robotaxis, then Tesla’s approach is the right one, and it has the potential to generate significant returns for investors if it gets robotaxis and unsupervised FSD right. Whether it will set investors up for life is an unknown — and planning on any one stock to do that would be foolish — but it’s got lots of promise. 

The stocks of Google parent Alphabet (GOOGL 3.10%) (GOOG 2.98%) and Meta Platforms (META 2.04%) shot higher in Friday trading. Although most stocks rose because the Federal Reserve strongly hinted at a September cut in interest rates, another factor was likely the announcement of Meta’s cloud deal with Google, as reported by The Information.

Considering the $10 billion size of the deal, one has to assume it is critical, particularly to Alphabet. Still, considering the state of the artificial intelligence (AI) stock, it could serve as a much-needed catalyst for the company’s investors. Here’s why.

Image source: Getty Images.

Terms of the partnership

Under the terms of the deal, Meta will pay Google $10 billion over six years. In exchange, it will receive access to Google Cloud’s storage, server, and networking services, along with other products.

Meta has previously relied on Amazon‘s Amazon Web Services (AWS) and Microsoft‘s Azure for such services. The deal does not necessarily mean it will deal less with these companies. More likely, it speaks to Meta’s insatiable demand for cloud infrastructure as it seeks to become a major player in the AI space.

Additionally, Meta and Alphabet are each other’s largest competitors in the digital advertising market. And in the first half of 2025, 98% of Meta’s revenue came from digital ads. Hence, in a sense, it is remarkable that these two would become partners in a different business.

How it helps Alphabet

However, in another sense, this is a huge step forward for Alphabet’s future. In the first half of this year, Alphabet earned 74% of its revenue from the digital ad market, down from 76% in the same period in 2024. This is also by design, as Alphabet has purchased dozens of businesses unrelated to the digital ad market in its efforts to transition into a more diversified technology enterprise.

So far, Google Cloud is the only one of these enterprises to appear in Alphabet’s financials. It accounted for 14% of Alphabet’s revenue in the first two quarters of 2025, up from 12% in the same year-ago period.

Additionally, Google Cloud generated over $49 billion in revenue over the trailing 12 months, implying the $10 billion from Meta over six years will make up a relatively small portion of Google Cloud’s business.

Nonetheless, the deal serves as a vote of confidence for Alphabet’s cloud business, one that continues to lag AWS and Azure in terms of market share.

Image source: Statista. Y-o-y = year over year.

The investor perspective is also crucial. Over the last year, Alphabet stock has outpaced the total returns of the S&P 500 by a significant but not eye-popping margin. However, it may help that Alphabet’s price-to-earnings (P/E) ratio of 22 is the lowest among “Magnificent Seven” stocks. Hence, the Meta deal could prompt investors to look more favorably upon that earnings multiple.

GOOGL Total Return Level data by YCharts.

Furthermore, if the Meta deal prompts other companies to do more business with Google Cloud, it could provide a boost to its market share and, by extension, Alphabet stock.

The Meta deal and Alphabet stock

Ultimately, Meta’s deal with Google Cloud will more than likely take Alphabet stock a leg higher, but investors should expect the effects to be more indirect. Indeed, the deal is remarkable in that it serves as a boost for third-place Google Cloud and is notable since the two companies are direct competitors in each other’s largest enterprises.

Although $10 billion in added business over six years is substantial, Google Cloud generated $49 billion over the last 12 months. Thus, it is a significant but not game-changing boost to the enterprise.

However, the deal may make Google Cloud more attractive to prospective customers, and the low P/E ratio could attract more investors to Alphabet. In the end, those could become the more significant benefits of the deal.

When Lemonade (LMND 1.03%) went public five years ago, it initially dazzled the market with the growth potential of its AI-powered insurance platform. With its AI chatbots and algorithms, Lemonade simplified the byzantine process of buying insurance. That approach made it popular with younger and first-time insurance buyers.

Lemonade’s stock skyrocketed from its IPO price of $29 to a record high of $183.26 in early 2021. However, rising interest rates subsequently deflated its valuations and highlighted its ongoing losses, and it now trades at about $58. So will its stock soar again and set fresh highs over the next five years?

Image source: Getty Images.

Understanding Lemonade’s business

Lemonade initially only provided homeowners and renters insurance, but it expanded its platform with term life, pet health, and auto insurance policies. Its acquisition of Metromile in 2022 significantly expanded its auto insurance business, and its partnership with Chewy (NYSE: CHWY) supports its pet health insurance business.

Lemonade served 2.69 million customers at the end of the second quarter of 2025. That’s more than double the 1 million customers it served at the end of 2020, but it’s still tiny compared to insurance giants like Allstate (NYSE: ALL), which serves more than 16 million customers.

Lemonade’s AI-driven platform differentiates it from bigger industry peers. But it still gauges its growth like a traditional insurer through its total customers; in-force premiums (IFP), or the total value of its premiums tied to its active policies; and gross earned premiums (GEP), or how much of those premiums the insurer has already earned by providing coverage. Its overall stability can be measured in its gross loss ratio (its total claims paid divided by its GEP) — which should stay below 100% — and its adjusted gross margins.

Data source: Lemonade. YOY = Year-over-year.

In 2023, Lemonade’s growth decelerated as it struggled to secure higher rates for its home and auto policies in several states. Those delays crippled its ability to counter inflation with rate hikes, so it approved fewer new policies and reined in its ad spending as it waited.

But in 2024 and 2025, its growth accelerated again as its higher rates were approved, it greenlit more policies again, and it ramped up its ad spending to attract more customers. The AI-driven automation of its onboarding process and claims also reduced its costs and boosted its gross margins.

What will happen to Lemonade over the next five years?

For 2025, Lemonade predicts its IFP will rise 27%-28% as its GEP grows 24%-25%. It expects its revenue to grow 26% as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rises from negative $150 million to negative $135-$140 million.

During its investor day presentation last November, Lemonade claimed it could grow its IFP ($944 million in 2024) to $10 billion in the “coming years.” It also predicted its adjusted free cash flow (FCF) would stay green in 2025, and that its adjusted EBITDA would turn positive in 2026.

It expects AI-driven efficiencies, along with economies of scale, to dilute its costs and drive it toward sustainable profits. It also aims to gain more customers as it expands across more states and expands its portfolio with more types of insurance.

From 2024 to 2027, analysts expect Lemonade’s revenue to grow at a compound annual growth rate (CAGR) of 45% as its adjusted EBITDA turns positive by the final year. That’s an impressive growth trajectory for a stock that trades at 4 times next year’s sales estimate. Assuming it hits those targets, grows its revenue at a CAGR of 20% for another three years, and still trades at 4 times sales, its market cap could surge more than 150% to $11.1 billion by 2030.

I believe it could achieve those gains as it attracts a steady stream of younger insurance buyers who are frustrated with traditional agent-driven platforms. It might experience some growing pains as it tries to bust out of its niche, but its AI driven approach could give it an edge against bigger industry peers.

Investors have ridden an incredible recovery from the April 2 “Liberation Day” tariff surprises. Since the April 8 low, the Nasdaq Composite (^IXIC 1.88%) has appreciated an incredible 40%. And of course, that recovery has taken place amid a decade-long bull market in technology growth stocks.

It’s easy to understand why. Society is becoming more digital and automated. The last 10 years have seen the emergence of cloud computing, streaming video, digital advertising, the pandemic-era boom in electronic devices and work-from-home, all topped off by the introduction of generative artificial intelligence (AI) marked by the unveiling of ChatGPT in late 2022.

However, after a long tech bull market, technology growth stocks have reached a worrying valuation level relative to other stocks, and today’s relative overvaluation mirrors an infamous period in stock market history.

Echoes of the dot-com era?

In several ways, technology stock performance and valuations are currently mirroring the extremes of the dot-com boom of the late 1990s. Unfortunately, we all know how that period ended, with a terrible “bust” that sent the Nasdaq tumbling three years in a row, eventually culminating in a 78% drawdown from the March 10, 2000, peak.

QQQ data by YCharts.

How frothy are tech stocks?

Technology innovation can be very exciting; however, that excitement often finds itself in the form of high valuations. According to data published on Charlie Bilello’s State of the Markets blog, the technology sector’s recent outperformance has now exceeded that of the height of the dot-com bubble:

Image source: Charlie Bilello’s State of the Markets blog.

The relative outperformance isn’t the only mirror to the dot-com era. Back then, tech stocks also became very large, leading to an outperformance of large stocks relative to small stocks. Similarly, tech stocks are often growth stocks with high multiples, reflecting enthusiasm over their future prospects. This is in contrast to value stocks, which trade at low multiples, usually due to their more modest growth prospects.

As you can see below, the outperformance of large stocks to small stocks, as well as growth stocks to value stocks, is at highs last seen during the dot-com boom.

Image source: Charlie Bilello’s State of the Markets blog.

Is it time to worry?

Given that higher-valued tech stocks now make up a larger portion of the index, the Schiller price-to-earnings (P/E) ratio, which adjusts for cyclicality in earnings over 10 years, while not quite at the levels of 1999, has crept up to the highest level since 1999, roughly matching the level from 2021:

S&P 500 Shiller CAPE Ratio data by YCharts. CAPE Ratio = cyclically adjusted P/E ratio.

As we all know, 2022 was also a terrible year for tech stocks. While it didn’t see a multiyear crash akin to the dot-com bust, 2022 saw the Nasdaq decline 33.1% on the year. Of course, at the end of 2022, ChatGPT came out, somewhat saving the tech sector as the AI revolution kicked off.

Counterpoints to the bubble thesis

Thus, when compared to history, tech stocks are at worrying levels. Given the similarities to the 1999 dot-com bubble and the 2021 pandemic bubble, some may think it’s time to panic and sell; however, there are also a few counter-narratives to consider.

The first is that, unlike in 1999, today’s technology giants are mostly truly diversified, cash-rich behemoths that account for a greater and greater percentage of today’s gross domestic product (GDP). While the late 1990s certainly had its leaders — including Microsoft (MSFT 0.56%), the only market leader that is in the same position today as then — they weren’t really anything like today’s tech giants, with robust cloud businesses, global scale, diversified income streams, and tremendous amounts of cash.

While market concentration in the top three weightings tends to occur before market downturns, index weighting concentration appears to be somewhat of a long-term trend now, increasing beyond prior highs in 1999 and 2008 since 2019.

Image source: Charlie Bilello State of the Markets blog.

Thus, it seems a higher weighting of the “Magnificent Seven” stocks could be a feature of today’s economy, rather than an aberration.

While it’s true that some of today’s large companies are overvalued, given their underlying strength and resilience, it’s perhaps not abnormal for them to garner higher-than-normal valuation multiples.

What investors should do now

It’s important to know that while taking note of market levels is important, it is extremely difficult to time market downturns. Famed investor Peter Lynch once said, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”

So, one shouldn’t abandon one’s long-term investing plan just because overall market levels may be frothy. That being said, if you need a certain amount of cash in the next one to two years, it may be a good idea to keep that money in cash or Treasury bills until then, rather than the stock market.

Furthermore, if you have a regular, methodical investing plan, stick to it. But if you are consistently adding to your portfolio every month or quarter, you may want to look at small caps, non-tech sectors, and value stocks today, rather than adding to large technology companies.

A fight over taxes consumers pay for cannabis products has prompted a standoff between unusual adversaries: child-care advocates and the legal weed industry.

On July 1, California’s cannabis excise tax increased from 15% to 19% as part of a political deal struck in 2022 to help stabilize the fledgling legal market. But the industry now says the increase is untenable as it faces a sharp decline in revenue and unfair competition from the growing illicit market.

An industry-sponsored bill moving through the Legislature — and already passed by the Assembly — would eliminate the tax increase and lower the rate back to 15% for the next six years. This would reduce by $180 million annually the tax revenue that the state contributes toward law enforcement, child care, services for at-risk youth and environmental cleanup.

The losses include about $81 million annually that would have specifically funded additional subsidized child-care slots for about 8,000 children from low-income families.

“They are choosing the cannabis industry over children and youth,” said Mary Ignatius, executive director of Parent Voices California, which represents parents receiving state subsidies to help pay for child care.

Child care faces setbacks

The tension over taxes for legal weed versus child care — both industries in crisis — highlights the inherent pitfalls of funding important social services with “sin taxes,” whether it’s alcohol, weed or tobacco — funding that experts say is often unstable and unsustainable.

Engage with our community-funded journalism as we delve into child care, transitional kindergarten, health and other issues affecting children from birth through age 5.

The measure’s next stop is the Senate. All bills in the Legislature must be passed by Sept. 12, and the governor must sign them by Oct. 12.

“We can both support the legal cannabis industry and protect child care. If the measure reaches the governor’s desk and is signed into law, we will work with the Legislature to ensure there are no cuts to child care due to this policy change,” said Diana Crofts-Pelayo, a spokesperson for Gov. Gavin Newsom.

But it’s unclear where money to backfill the losses would come from, as the state grapples with declining finances and federal funding cuts.

The money from cannabis taxes represents a fraction of California’s $7-billion annual child care budget. But as federal cuts to social services for low-income families, including Head Start, continue, any potential loss creates a sense of panic among child care advocates who say California ought to be shoring up revenue options right now — not reducing them.

“Every single dollar needs to remain in the programs that are serving our children and families. What may seem like a small amount to some is everything for advocates who are fighting for it,” said Ignatius.

The past decade has been a time of progress for child care advocates, as the state rebuilt a child care industry decimated by cuts during the Great Recession. California has more than doubled spending on child care since the recession low, added about 150,000 new subsidized child care slots, eliminated the fees paid by families, increased pay for child care workers and added a new public school grade level for 4-year-olds.

But despite these efforts to bolster the market, California’s child care industry still suffers from low pay for workers, unaffordable costs for families, and a shortage of spaces for infants and toddlers.

The waiting list for subsidized child care slots is still so long that some parents have taken to calling it the “no hope list,” said Ignatius. Those who join the list know they could wait years before a spot opens up, and by that time their child may already be in kindergarten or beyond.

Jim Keddy, who serves on an advisory committee to help determine what programs the tax will finance, opposes the proposed reduction.

“If you don’t work to promote and hold on to a funding stream for children, someone eventually takes it from you,” said Keddy, who is also executive director of Youth Forward, a youth advocacy organization.

The cannabis industry, however, argues that while the causes the tax supports may be worthwhile, market conditions are so abysmal that it cannot weather an increase.

Legal cannabis industry struggles to remain afloat

“It is sad that the cannabis industry is being pit against social programs, childhood programs and educational programs,” said Jerred Kiloh, president of United Cannabis Business Assn. and owner of the Higher Path dispensary in Sherman Oaks. “The reality is, if our legal industry keeps declining, then so does their tax revenue.”

In 2022, when the cannabis industry agreed to increase the excise tax, quarterly cannabis sales were at their peak. The agreement offered the new industry temporary relief by eliminating the cultivation tax passed by voters under Proposition 64, the 2016 initiative that legalized cannabis. In exchange, state regulators would be able to increase the excise tax after three years to make the change revenue neutral.

But since then, sales have plunged to their lowest levels in five years, due in part to the growing illicit market that is siphoning off sales from legal dispensaries.

In L.A., Kiloh said that between state and local taxes, his legal dispensary customers end up paying 47% in taxes on their purchase. But if they shopped instead at any of the thousands of stores in L.A. selling cannabis products without a license, they could avoid state and local cannabis taxes entirely.

“A 30% increase in an excise tax that is already egregious is just kind of the breaking point for a lot of consumers,” said Kiloh.

Even before the excise tax hike went into effect, just 40% of the cannabis consumed in California was obtained from the legal market, according to the California Department of Cannabis Control.

The measure to drop the excise tax, AB564, received widespread support from Assembly members, including stalwart supporters of early childhood education like Assembly Majority Leader Cecilia Aguiar-Curry (D-Winters), chair of the Legislative Women’s Caucus.

“Revenues from legal sales of cannabis are already dropping and if we keep raising the tax they’ll drop even more. That penalizes cannabis businesses who are doing the right thing and working within the legal market. And, it makes illegal sales from cartels and criminals more competitive,” she said in a statement. “We need to fund our kids’ education through the State General Fund, but if we want to supplement education and youth programs, cannabis tax dollars will only exist if we steady the legal market and go after those illegal operators.”

How reliable are sin taxes?

Lucy Dadayan, a researcher who studies sin taxes at the Tax Policy Center, a nonpartisan think tank based in Washington, D.C., said the California predicament reflects a larger problem with sin taxes.

If a sin tax is successful and consumption drops — as it has with tobacco — “the tax base shrinks. And in the case of cannabis, there’s the added wrinkle that a high tax rate can push consumers back into the illicit market, which also reduces revenue,” she said.

This is not the first time services for the state’s youngest children have been affected by reductions in a sin tax.

In 1998, California voters slapped cigarettes with a hefty surcharge to pressure smokers to give up their habit. The state used the money to fund “First 5” organizations in every county, which are dedicated to improving the health and well-being of young children and their families. But the less people smoked over time, the less money was available for early childhood programs, and the First 5 system now finds itself confronting an existential crisis as it faces a rapidly declining revenue source.

Meanwhile, the critical social services like child care that come to depend on sin taxes tend to get more and more expensive, creating a “mismatch” in the tax structure versus the need, said Dadayan.

“In the short term, these taxes can raise a lot of money and help build public support for legalization or regulation. But in the long term, they can leave important programs vulnerable because of shifting consumption patterns,” she said.

This article is part of The Times’ early childhood education initiative, focusing on the learning and development of California children from birth to age 5. For more information about the initiative and its philanthropic funders, go to latimes.com/earlyed.

As a buy-and-hold investor, I closely follow my long-term investments through exchange-traded funds and retirement accounts. I’ve always followed a Warren Buffett-style of investing, in which I look for strong, profitable companies to hold over the long term.

However, I also recognize that tech stocks are way too important — and profitable — to miss out on. Tech stocks represent companies that are at the forefront of innovation and development, leading the world’s charge into the future. Without tech companies, we wouldn’t have a host of massively significant advances that we take for granted today — things like personal computers, online banking, 5G wireless service, the internet, smartphones, and GPS technology. Nor would we have the incredible types of tech that companies are still making rapid progress on today — such as cloud computing, the Internet of Things, generative AI, and autonomous vehicles.

Including strong, profitable tech stocks in your portfolio is one of the best ways to give yourself an opportunity to outperform the market. Consider that the tech-heavy Nasdaq Composite is up nearly 18% in the last 12 months, handily outperforming the Dow Jones Industrial Average and the S&P 500.

Three tech stocks that I think would be great choices for any retail investor’s portfolio are Nvidia (NVDA 1.65%), Taiwan Semiconductor Manufacturing (TSM 2.58%), and Meta Platforms (META 2.04%).

Image source: Getty Images.

1. Nvidia

Semiconductor maker Nvidia is the biggest company in the world by market capitalization, so it naturally gets the top position on this list, too. While a recent pullback has driven the market cap from $4.4 trillion down to $4.2 trillion, the tailwinds that have propelled Nvidia’s upward over the last few years are still present — and they won’t be going away any time soon.

Nvidia designs graphics processing units (GPUs) that are used by data centers to provide the computing power required by a host of advanced computing tasks, such as training and running large language models (LLMs) and artificial intelligence (AI) systems. Nvidia’s GPUs are designed to be deployed in clusters of hundreds or thousands, boosting the parallel processing power they can apply to workloads. In addition, Nvidia’s CUDA platform provides libraries and tools for developers who are working on software that will be powered by its GPUs. It’s a popular platform with developers, and it’s only compatible with Nvidia’s chips. That added competitive advantage is one reason why I’m confident that it will continue to control the lion’s share of the GPU market for years to come.

Nvidia will release its results for its fiscal 2026 second quarter on Aug. 27, and I think it’s going to be another sterling report. I’ll also be looking carefully at management’s guidance, as the company is expected to resume selling its H20 AI chips to customers in China after being blocked from exporting them to that country earlier this year.

2. Taiwan Semiconductor

As the company that fabricates the advanced chips designed by Nvidia (as well as an array of other chip companies), Taiwan Semiconductor benefits from many of the same tailwinds as the GPU leader. But there are some differences between their businesses that make TSMC stock even more appealing.

As the world’s leading third-party chip foundry, Taiwan Semi manufactured nearly 12,000 products for 522 customers in 2024, employing 288 separate process technologies. It’s involved in about 85% of all semiconductor start-up product prototypes. In short, this is an ideal stock to own if you believe that the semiconductor business broadly will continue to grow, but you want to hedge some of your exposure away from Nvidia.

Taiwan Semi is also moving to limit its exposure to the trade war between Washington and Beijing, and to expand its manufacturing footprint further beyond the island of Taiwan, which China has designs on. The company is in the midst of spending $165 billion to expand its new manufacturing and R&D facility in Arizona and bring some of its most advanced fabrication processes to the U.S.

3. Meta Platforms

Meta Platforms, which operates Facebook, Instagram, WhatsApp, and Messenger, is the unquestioned king of the social media companies. On average, 3.48 billion people use its platforms every day — and that number is increasing. Its daily active user count was up by 6% in June from a year earlier.

The company leverages that massive audience — and the mountain of information it collects about them — into an impressive revenue stream. Ad impressions were up 11% in the second quarter from the previous year. Overall, Meta reported $47.5 billion in revenue in the second quarter, up 22% year over year.

Meta’s own artificial intelligence platform, Meta AI, has been driving a lot of its recent success. Meta AI’s chatbot can generate content, answer questions, and create images. The company also provides AI-powered tools to advertisers to help them reach the customers they want, making their ads on its social media platforms more effective.

Tech stocks to buy and hold

Companies in the tech sector must constantly innovate in their efforts to stay relevant, and their stocks can sometimes be volatile. But Nvidia, Taiwan Semiconductor, and Meta Platforms aren’t merely chasing trends — they’re shaping them. I expect that these companies will remain at the forefront of their industries as we move into the second half of the decade, and I view them as good bets to continue outperforming the market. That’s why I like them for any buy-and-hold portfolio.

The largest growth-focused U.S. companies by market cap are Nvidia (NVDA 1.65%), Microsoft (MSFT 0.56%), Apple (AAPL 1.21%), Amazon (AMZN 3.12%), Alphabet (GOOG 2.98%) (GOOGL 3.10%), Meta Platforms (META 2.04%), Broadcom (AVGO 1.48%), Tesla (TSLA 6.18%), Oracle (ORCL 1.30%), and Netflix (NFLX -0.20%).

Known as the “Ten Titans,” this elite group of companies has been instrumental in driving broader market gains in recent years, now making up around 38% of the S&P 500 (^GSPC 1.52%).

Investment management firm Vanguard has the largest (by net assets) and lowest cost exchange-traded fund (ETF) for mirroring the performance of the index — the Vanguard S&P 500 ETF (VOO 1.46%). Here’s why the fund is one of the simplest ways to get significant exposure to the Ten Titans.

Image source: Getty Images.

Ten Titan dominance

Over the long term, the S&P 500 has historically delivered annualized results of 9% to 10%. It has been a simple way to compound wealth over time, especially as fees have come down for S&P 500 products. The Vanguard S&P 500 ETF sports an expense ratio of just 0.03% — or $3 for every $10,000 invested — making it an ultra-inexpensive way to get exposure to 500 of the top U.S. companies.

The Vanguard S&P 500 ETF could be a great choice for folks who aren’t looking to research companies or closely follow the market. But it’s a mistake to assume that the S&P 500 is well diversified just because it holds hundreds of names. Right now, the S&P 500 is arguably the least diversified it has been since the turn of the millennium.

Megacap growth companies have gotten even bigger while the rest of the market hasn’t done nearly as well. Today, the combined market cap of the Ten Titans is $20.2 trillion. Ten years ago, it was just $2.5 trillion. Nvidia alone went from a blip on the S&P 500’s radar at $12.4 billion to over $4 trillion in market cap. And not a single Titan was worth over $1 trillion a decade ago. Today, eight of them are.

S&P 500 Market Cap data by YCharts.

To put that monster gain into perspective, the S&P 500’s market cap was $18.2 trillion a decade ago. Meaning the Ten Titans have contributed a staggering 51.6% of the $34.3 trillion market cap the S&P 500 has added over the last decade. Without the Ten Titans, the S&P 500’s gains over the last decade would have looked mediocre at best. With the Ten Titans, the last decade has been exceptional for S&P 500 investors.

The Ten Titans have cemented their footprint on the S&P 500

Since the S&P 500 is so concentrated in the Ten Titans, it has transformed into a growth-focused index, making it an excellent way to double up on the Ten Titans. But the S&P 500 may not be as good a fit for certain investors.

Arguably, the best reason not to buy the S&P 500 is if you’re looking to avoid the Ten Titans, either because you already have comfortable positions in these names or you don’t want to take on the potential risk and volatility inherent in a top-heavy index.

That being said, the S&P 500 has been concentrated before, and its leadership can change, as it did over the last decade. The underperformance by former market leaders, like Intel, has been more than made up for by the rise of Nvidia and Broadcom.

So it’s not that the Ten Titans have to do well for the S&P 500 to thrive. But if the Titans begin underperforming, their sheer influence on the S&P 500 would require significantly outsized gains from the rest of the index.

Let the S&P 500 work for you

With the S&P 500 yielding just 1.2%, sporting a premium valuation and being heavily dependent on growth stocks, the index isn’t the best fit for folks looking to limit their exposure to megacap growth stocks or center their portfolio around dividend-paying value stocks.

The beauty of being an individual investor is that you can shape your portfolio in a way that suits your risk tolerance and investment objectives. For example, you use the Vanguard S&P 500 ETF as a way to get exposure to top growth stocks like the Ten Titans and then complement that position with holdings in dividend stocks or higher-yield ETFs.

In sum, the dominance of the Ten Titans means it’s time to start calling the Vanguard S&P 500 ETF what it has become, which is really more of a growth fund than a balanced way to invest in growth, value, and dividend stocks.

Investors with a high risk tolerance and long-term time horizon may cheer the concentrated nature of the index. In contrast, risk-averse investors may want to reorient their portfolios so they aren’t accidentally overexposing themselves to more growth than intended.