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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.

Who wouldn’t be interested in some Warren Buffett stocks to consider for their portfolio? After all, Buffett’s investing chops have not been exaggerated. He increased the value of his company Berkshire Hathaway (BRK.A -0.13%) (BRK.B -0.06%) by 5,500,000% (nearly 20% annually) over 60 years. In contrast, the S&P 500 index of 500 of America’s biggest companies gained about 39,000% (10.4% annually, on average) over the same period.

Here, then, are some stocks in the Berkshire Hathaway portfolio that you might want in your own. Do note, though, that the days of Buffett himself making all the investment decisions (often in consultation with his late business partner Charlie Munger) are over. He now has two investing lieutenants, Ted Weschler and Todd Combs, so some stocks in the portfolio may be their picks.

Image source: The Motley Fool.

1. Amazon

You might know that Berkshire Hathaway owns multiple insurance and energy operations, along with companies such as Dairy Queen International, See’s Candies, Fruit of the Loom, and the entire BNSF railroad. Buffett has long avoided many high-tech companies, but yes, his company now owns shares of Amazon.com (AMZN 3.12%) — some 10 million shares, in fact, per the latest disclosure.

You might want to consider buying Amazon stock, too, because it still has enormous growth potential. It features a hugely dominant online marketplace, but it’s also home to a major cloud computing platform, Amazon Web Services (AWS). Its shares are appealingly valued at recent levels, too, with a recent forward-looking price-to-earnings (P/E) ratio of 34, well below the five-year average of 46.

2. Lennar

You may not be very familiar with Lennar (LEN 5.19%), but it’s a major homebuilder in America, and its future is promising because America needs many more homes — especially affordable ones for young first-time home buyers. If interest rates drop in the near future, that could spur home buying, though a recession could thwart that trend.

Near term, it’s hard to know what will happen, but Lennar’s long-term outlook is promising. Patient investors can collect a dividend that recently yielded 1.5% — and that has grown by an annual average rate of 33% over the past five years.

Lennar shares are reasonably priced at recent levels, too, with a price-to-sales ratio of 1, on par with its five-year average, and a forward P/E of 13 above the average of 9. It’s a new holding for Berkshire, and Berkshire already owns 3% of the company.

3. Chevron

Chevron (CVX 1.50%) is Berkshire’s fifth-largest stock holding, and Berkshire now owns close to 7% of the energy giant. It’s another dividend-paying stock, with a recent fat 4.5% yield. It’s also been a big stock repurchaser, with its reduced share count leaving each remaining share more valuable.

Why might you buy Chevron stock? Well, thanks to various investments (such as its purchase of Hess), it stands to collect a lot of free cash flow in the years ahead — which can be used to pay dividends and increase dividends. Chevron is also well positioned to profit from both traditional energy sources as well as alternative energies.

Chevron’s forward P/E was recently 20, a bit above its five-year average of 14, suggesting it’s somewhat overvalued. You might wait for a lower price, or buy into it incrementally, or just buy anyway — as long as you plan to remain invested for many years.

4. UnitedHealth Group

Berkshire was in the news recently, for buying into the beleaguered health insurer UnitedHealth Group (UNH 1.24%). It’s a new holding for Berkshire, and was recently the 18th-largest position in the portfolio

Shares of the insurer were recently down 39% year-to-date, in part due to the fact that it’s being investigated by the Department of Justice for possible Medicare fraud. Also, its CEO has just stepped down. For those who see such issues as temporary and surmountable, this is a good buying opportunity.

You can be sure the company’s management is working to turn things around, and simple demographics paint a promising future, too, as our growing and aging population will continue to need healthcare — and medications. (UnitedHealth includes the pharmaceutical specialist Optum.)

5. Berkshire Hathaway

A last Berkshire Hathaway stock to consider is Berkshire Hathaway itself. It’s built to last, after all, and is likely to keep growing over time, though not at the breakneck speeds of yore, perhaps. Buffett is stepping down at the end of the year, but he’ll still be around, and his successor, Greg Abel, is a promising choice.

Berkshire Hathaway doesn’t pay a dividend, but when it’s under new management, that might change. It has all depended on whether there were more productive ways to deploy the company’s cash. So far there have been, but Abel might decide differently. Investing in Berkshire means you’ll always be a part-owner of any stock in Berkshire’s portfolio.

Give any or all of these companies some consideration for your own portfolio. And know that you can always take the easier (and also effective) path, recommended by Buffett himself, of opting for a simple, low-fee index fund.

The S&P 500 (^GSPC 1.52%) is up around 13% over the past year. The shares of Brookfield Asset Management (BAM 3.37%) have risen over 40%. Investors clearly see opportunity in the Canadian asset manager’s future. But have they priced in all the good news? Probably not, given the company’s huge growth goals. Here’s why Brookfield Asset Management could still be worth buying while it hovers around $60 a share.

What does Brookfield Asset Management do?

Brookfield Asset Management is an asset manager, taking money from others and investing it on their behalf. The company also manages its own money. The big story to watch is what Brookfield Asset Management calls fee-bearing capital, which is the money it handles for others. It charges management fees for doing this, and, thus, the amount of fee-bearing capital it has will have the biggest effect on the business’ revenues and earnings.

Image source: Getty Images.

Although Brookfield Asset Management’s history is rooted in infrastructure, with a global focus, today it handles money across five different investment categories. Renewable power, infrastructure, and real estate all stick closely to the company’s historical focus. But it has also reached out into private equity and credit, expanding its reach and growth opportunities. These businesses are all being positioned to take advantage of what management believes are key global themes: Digitization, decarbonization, and deglobalization.

Brookfield Asset Management operates in over 30 countries around the world. Thus, it has a wide reach as it looks for investment opportunities for itself and for its customers. Overall, Brookfield Asset Management has roughly $1 trillion in assets under management. Of that sum, roughly $550 billion is fee-bearing capital.

Where to from here for Brookfield Asset Management?

Brookfield Asset Management has been talking up its growth opportunity for a little while now. Given the price gain over the past year, it looks like investors are starting to listen. A big example of the growth opportunity came when the company raised its dividend per share 15% at the start of 2025. That is a very big dividend increase, but it’s just the foundation of the story.

Management has laid out its growth goal through the end of the decade. The plan is to increase the fee-bearing capital it handles in every one of its segments, with the total expected to double to around $1.1 trillion. That, in turn, will increase the company’s revenues and earnings. The expectation is that fee-bearing earnings will rise 17% a year, on average, between 2024 and 2029. That, in turn, will allow the company to continue increasing the dividend by 15% each year.

Basically, the dividend will roughly double in about five years’ time. If that’s the case, to just maintain the current 3% dividend yield would require the share price to double, too. This still looks like an interesting growth and income stock even after the rapid price increase this year. Consider that peer Blackstone (BX 4.17%) has a 2.6% yield, and BlackRock (BLK 2.03%) has a 1.9% yield. The yield comparison here suggests that Brookfield Asset Management’s valuation isn’t extreme and, in fact, it might still be discounted relative to its competitors.

Execution will be key, but it looks like there’s still room to run

Clearly, the future for Brookfield Asset Management depends a great deal on how well it executes its growth strategy. But that’s true of all companies. There’s no particular reason to doubt that management can pull it off, given the company’s over 100-year-long history in the asset management business. Buying the stock while it’s below $60 a share, despite the recent price advance, could be a good opportunity for investors with a dividend focus and for those with a growth focus.

XRP (XRP 0.20%) has recently seen pullbacks following news that the Securities and Exchange Commission (SEC) has delayed its decision on whether the cryptocurrency can be included in new exchange-traded funds (ETFs). Higher-than-expected inflation and recent reports from major U.S. retailers suggesting that inflationary pressures could be poised to worsen in the near term have also weighed on the token’s valuation.

While XRP is still up 39% across 2025’s trading, it’s also down 20% from its high. On the heels of recent sell-offs, there’s one significant catalyst on the horizon that suggests that now could be a good time to invest in the cryptocurrency.

Image source: Getty Images.

Buying XRP before October could be a smart move

With a recent update, the SEC said that it had pushed out decisions on whether it would allow two new ETFs centered around the XRP token that were expected to arrive this month. A decision on the application for the Grayscale XRP trust is now expected to arrive Oct. 18, and one on the 21Shares Core XRP Trust is expected by Oct. 19.

While the SEC’s recent decision to postpone how it will respond to applications for these ETFs has seemingly added to uncertainty surrounding whether the cryptocurrency will become part of publicly traded funds listed on major exchanges, there are good reasons to think that the token will receive approval for fund inclusion. Current SEC chairman Paul Atkins’ support for the crypto industry and general advocacy for a more lax regulatory approach to the space is one of the key points where he differed from previous chairman Gary Gensler.

Along with executive orders on the crypto industry and other moves from the Trump administration to support the adoption of cryptocurrencies, signs of policy shifts at the SEC support the thesis that the regulatory agency will approve XRP’s inclusion in ETFs. While higher-than-expected inflation and a slower path to interest rate cuts could introduce bearish pressures for the token, political and regulatory catalysts suggest paths to more gains this year.

There’s at least one good thing to say about Iovance Biotherapeutics (IOVA 5.71%), a small-cap biotech. The drugmaker is an innovative company. It developed Amtagvi, a medicine that became the first of its kind approved for advanced melanoma (skin cancer).

However, this breakthrough hasn’t led to solid performances. Since Amtagvi’s launch last year, Iovance Biotherapeutics’ stock has been southbound. Even so, with an average price target of $9.10, which implies a potential upside of 261% from its current levels, Wall Street continues to have faith in the company. Should investors consider buying Iovance Biotherapeutics’ shares?

Image source: Getty Images.

What’s going on with Iovance Biotherapeutics?

The process involved in manufacturing and administering Amtagvi is complex. It requires physicians to collect a piece of the patients’ tumors from which they extract T cells (which, among other things, help fight cancer) to grow in a lab. From that, patient-specific infusions of Amtagvi are manufactured in a specialized facility. Before receiving Amtagvi, patients have to undergo chemotherapy. The entire process typically takes over a month.

There are also significant expenses associated with the medicine that wouldn’t exist if Amtagvi were an oral pill. All these factors have made it challenging for Iovance Biotherapeutics. Earlier this year, the company revised its guidance after realizing it had been too optimistic with its estimates of activating authorized treatment centers where Amtagvi can be administered to patients.

Still, Amtagvi is generating decent sales. In the second quarter, Iovance Biotherapeutics reported revenue of about $60 million, almost double what it reported in the year-ago period. Most of that was from Amtagvi. The company’s other commercialized product, Proleukin, another cancer medicine, generates relatively little revenue. For fiscal 2025, Iovance expects total product revenue of $250 million to $300 million. Again, most of that will be from Amtagvi. That’s not bad for a medicine that was only approved last year.

Is there more upside for the stock?

Those bullish on the stock might point out several things. First, Amtagvi could earn approval in other regions within the next 12 months, including Canada and Europe. That would significantly expand Iovance Biotherapeutics’ addressable market. Considering the medicine could generate upward of $200 million in the U.S. the year after approval, the global opportunities look attractive.

Second, even in the U.S., Iovance has barely scratched the surface of the patient population it is targeting. Amtagvi is indicated for melanoma patients who have undergone some prior therapies unsuccessfully. In the U.S., 8,000 patients die from the disease every year. Even if not all of them would be eligible for Amtagvi, it is certainly a lot more than the just over 100 Iovance has treated so far.

Third, Amtagvi could earn important label expansions down the line. The medicine is being investigated across a range of other indications, including lung, endometrial, and cervical cancer. If it can score phase 3 clinical wins, that could expand the therapy’s target market and jolt Iovance Biotherapeutics’ stock price.

However, even with all that, the biotech remains a risky bet. The complex and expensive nature of the medicine it develops and manufactures will make it challenging to gain significant traction while allowing it to turn a profit. Expanding into new territories will help Amtagvi’s sales, but it will also significantly increase its expenses.

Further, Iovance isn’t exactly cash-rich. The company ended the second quarter with about $307 million in cash, equivalents, and restricted cash, which it believes will enable it to last until the fourth quarter of next year. That’s not very long. Amtagvi-related sales and various financing options it could pursue should allow it to keep the lights on even longer, but it’s rarely a good sign when a company says that its cash will run out within a year and a half.

Finally, Iovance Biotherapeutics could encounter clinical and regulatory obstacles with Amtagvi, which could negatively impact its stock price. The biotech stock looks too risky for most investors. I don’t expect Iovance Biotherapeutics to hit its average Wall Street price target in the next 12 months.

But investors with a large appetite for risk might still want to consider initiating a small position in the stock. Given its innovative potential and the possibility that it will execute its plan flawlessly, its shares could skyrocket.

It’s year No. 49 covering high school sports in Southern California. Let me tell you how it started.

Cut from the Madison Junior High basketball team, I discovered writing for the school newspaper offered more power and influence than sitting on a bench. Everyone likes to see their name mentioned, so now I knew I had a big responsibility going forward.

It was the time of Watergate and new heroes such as journalists Bob Woodward and Carl Bernstein uncovering corruption at the highest level, inspiring future journalists. While attending Poly High in Sun Valley, Pete Kokon, the sports editor of the San Fernando Sun, offered to pay me $15 a week to write a story about high school sports. It was the first lesson of a sportswriter — don’t worry about the money, bask in the spotlight of having your name appear in a byline.

Kokon was the most entertaining character I’ve ever met. He owned an apartment building in Sherman Oaks and lived in his “penthouse,” which consisted of entering a screen door that was never locked and seeing a small room on the top floor. He’d leave his keys in his unlocked car under a mat. He used to cuss out Ronald Reagan whenever his name was mentioned. He taught me how to bet at the race track, saying, “Give me a dollar,” before going to the window to place a $2 bet.

Eric Sondheimer giving a speech in 1989 at the National Football Foundation and College Hall of Fame at Knollwood Country Club.

(Bob Messina Photography)

He taught me how to play golf, inviting me to Woodland Hills Country Club and shouting out his club ID number to pay for everything from food to shirts to drinks. He’d write all his stories on an ancient Royal typewriter. He smoked cigars and once was a boxing promoter. Two of his best friends were Hall of Famers Don Drysdale and Bob Waterfield, fellow Van Nuys High graduates. Everyone knew him, appreciated him and feared him whenever he got angry.

Pete Kokon covered high school sports in the San Fernando Valley for more than 60 years.

(Valley Times)

For more than 60 years, he covered high school sports. I never thought I’d challenge his record. But after becoming a stringer for the Daily News in 1976 and being hired full time in 1980 after turning down the job of sports information director at Cal State Northridge, I learned there was a need to cover local sports and it became my passion to make a difference. Yes, I’ve covered the Super Bowl, the NBA Finals, the 1984 Olympic Games, the World Series, the Rose Bowl, the Breeders’ Cup, the Little League World Series, but nothing has provided more satisfaction than telling the stories of teenagers rising up in the face of adversity or overcoming doubts from peers to succeed.

There have been tough stories through the years. I’ll never forget staying awake until 11:30 p.m. to see the lead story on ESPN SportsCenter detailing possible NCAA rule violations by the University of Kentucky after a package sent to a high school basketball star in Los Angeles had money inside. That was a story helped by others at the Daily News.

I’ve always treated high school sports as different than college or pros. These are teenagers, with criticism of coaches and athletes mostly off limits. But times are changing. Players are getting paid. Coaches are engaging in ethical lapses. It’s a growing challenge. I will continue to respect the tradition of high school sports being about having fun but insist on rules being followed.

Eric Sondheimer interviews Corona Centennial’s Eric Freeny at the end of the state championship in Sacramento in March 2022. Freeny is now a freshman at UCLA.

(Nick Koza)

There are so many stories of coaches getting mad. Sometimes it takes time for them to understand I’m just trying to do my job as a fair, dedicated journalist who understands my responsibilities and remembers my role.

Let me give an example. At one point years ago, Sylmar basketball coach Bort Escorto stopped reporting scores. Maybe it had something to do with writing about transfers. Maybe not. But today, he always answers my calls, “I didn’t do it.”

You know you’ve won any argument when someone claims your bias for one school over another. That used to be the weekly debate years ago among Crespi and Notre Dame fans. Signs were made, barbs were shouted. It made me laugh. Now it’s about sharing selfies.

What keeps me coming back every season are the many new stories to tell. No area has a larger, more diverse collection of top athletes from a variety of sports than Southern California.

Eric Sondheimer interviews sophomore Tajh Ariza after a basketball game in 2022.

(Nick Koza)

There was a time more than a year ago that I got frustrated with the negativity going on in the world. I needed to do something to change my perspective. That’s when I vowed to write something positive every day about high school sports. Prep Talk was created to help inspire me and hopefully others that a positive message can break through in an era of social media nonsense.

To the readers through the years, you’ve helped me stay employed and stay dedicated to telling stories that resonate around the Southland. Newspapers are in trouble, but I can only control what I can control, so thank you for being loyal customers at a time of upheaval.

Eric Sondheimer interviews coach Ed Azzam of Westchester in 2020.

(Nick Koza)

Through the years as technology changed, I’ve adapted, such as sprinting from games to find a rotary telephone in a locked P.E. office or driving to a phone booth to call in a story under deadline pressure. I’ve climbed fences after being locked in as the last person in a stadium. I’ve sat on a gym floor in darkness writing a story. One night at Bishop Alemany, I lost my cellphone on the football field. I was ready to throw up in embarrassment. The athletic director, Randy Thompson, found it. My story was saved. I’ve learned to take videos and shoot photos and speak in front of audiences (thank you to speech class 101 at CSUN).

Today’s world for high school sports reporters is about not getting kicked out by security after games when everyone has left and staying calm when security doesn’t want to let you in before games or on a sideline with a press pass to do your job. Common sense is disappearing in the name of following orders.

I already have gold passes from the Southern Section and City Section, which means if I step away, I’ll still be able to attend events.

When and how this ends has yet to be decided. Pete Kokon died at age 85 in 1998 when he was found with his TV on and the channel tuned to ESPN in his penthouse apartment.

As long as a level of professionalism remains among stakeholders, I will continue to do my best to tell stories. My job is about serving the public, not myself, and that will be my mission forever.

Programmatic advertising specialist The Trade Desk (TTD 1.70%) is having a terrible 2025 so far. The year went from bad to worse for investors after the company released its second quarter results on Aug. 7.

The Trade Desk stock was hammered as the company’s guidance indicated a slowdown in its growth. Though The Trade Desk has been integrating artificial intelligence (AI) tools into its programmatic advertising platform, it seems like the stiff competition from bigger players in the advertising industry is hampering its ability to sustain healthy growth levels.

Let’s look at the reasons why The Trade Desk has dropped an alarming 55% year to date, and determine whether that drop represents an opportunity to buy the stock in anticipation of a potential turnaround.

Image source: Getty Images

Execution issues and competitive pressures are weighing on The Trade Desk

The Trade Desk started 2025 on a negative note. The stock was clobbered after releasing its full-year 2024 results in February when sales execution issues led the company to miss its revenue target. The company’s May quarterly report helped it win back investor confidence as Q1 revenue was up by 25% year over year and well ahead of consensus expectations.

However, inconsistency reared its ugly head once again in Q2. Revenue growth slowed to 19%, and earnings increased just a few cents to $0.39 per share. In the same quarter last year, The Trade Desk had reported much stronger revenue growth of 26%.

The guidance, however, is what really spooked the market. Management expects revenue growth in the current quarter to further decelerate to 14% for a total of $717 million. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast of $277 million would be an improvement of just 8% year over year.

It is easy to see why this slowdown has investors worried. The Trade Desk’s competitors in the digital advertising market have been reporting solid growth. Amazon, primarily known for its e-commerce and cloud computing offerings, reported a healthy 23% year-over-year increase in its advertising business last quarter to $15.7 billion.

The tech giant struck a deal with streaming provider Roku to expand its footprint in the connected TV advertising space in the U.S., gaining access to 80 million households. Connected TV is one of the key areas that’s driving growth for The Trade Desk, so Amazon’s big move in this market is definitely a cause for concern.

On the other hand, social media giant Meta Platforms‘ focus on deploying AI tools is helping it win a bigger share of advertisers’ wallets. Meta’s tools are driving strong returns for advertisers, and the company has also been able to boost user engagement through AI-recommended content.

As a result, Meta’s revenue increased 22% last quarter. It is worth noting that both Meta and Amazon are significantly larger companies than The Trade Desk, and they are achieving healthy growth levels while The Trade Desk is witnessing a slowdown. This doesn’t bode well for the company, especially given its valuation.

Why investors could be in for more pain

Analysts are forecasting an improvement of just 8% in The Trade Desk’s earnings this year to $1.79 per share. The company is expected to return to double-digit growth in 2026.

Data by YCharts.

However, The Trade Desk is trading at 66 times trailing earnings, which is double the average price-to-earnings ratio of the Nasdaq-100 index. Buying The Trade Desk stock at this expensive multiple doesn’t look like a smart thing to do right now. The slowing revenue growth is going to negatively impact the bottom line as well, so it remains to be seen if the company is capable of matching Wall Street’s earnings expectations going forward.

That’s why investors would do well to focus on other tech stocks that are clocking faster growth rates while trading at more reasonable valuations, as The Trade Desk is likely to remain under pressure going forward.

For all the attention artificial intelligence (AI) has received over the last three years, it’s possible we’re still very early in the spread of the technology. Just 9.2% of the 1.2 million U.S. businesses surveyed by the U.S. Census Bureau in June said that they have adopted AI in parts of their operations. That number continues to climb every quarter, though.

There’s a long runway ahead for AI, but that doesn’t make every stock in the space a long-term winner. It’s likely AI stocks will face some major headwinds at some point in the not-too-distant future. Sam Altman, CEO of OpenAI, says we’re currently in a bubble, but that doesn’t diminish the long-term importance of AI innovations.

The best AI stocks are well-positioned to capitalize on the current environment of growing adoption and tremendous innovation, but also maintain long-term competitive advantages that will ensure they remain great investments well into the future. On top of that, they have to offer good value that growth investors expect to receive. Many AI stocks are arguably overpriced, but here are three worth buying right now.

Image source: Getty Images.

1. Microsoft

Microsoft (MSFT 0.56%) increased its investment in OpenAI in early 2023, which gave it both a major customer for its cloud computing segment, Azure, and the ability to quickly build new AI services for both Azure and its enterprise software segment. The company has produced tremendous results on both fronts.

Azure is now a $75 billion business, with revenue increasing 34% year over year in fiscal 2025. Not only is Microsoft growing a $75 billion business that quickly, but it’s also accelerating revenue. Azure sales grew 39% year over year in its most recent quarter. Revenue could continue to speed up as management reiterated that the cloud business remains capacity-constrained on its most recent earnings call.

Microsoft is spending heavily to support that growth. Management expects capital expenditures (capex) for the current quarter to climb to $30 billion, jumping from $24 billion last quarter.

But the top-line growth for Azure appears to be worth the up-front spending. Remaining performance obligations climbed 35% last quarter, so there’s still a lot of unearned revenue for Microsoft to realize. Management expects another strong quarter for Azure with 37% revenue growth.

Microsoft’s enterprise software business has also benefited from developing new AI services. The company has created its own suite of AI assistants for use across its software, dubbed Copilot, which provides a way to increase revenue per seat while further locking in customers.

But the real potential may be in its Copilot Studio software, which allows businesses to use foundation models like OpenAI’s GPT-5 to create their own AI agents using proprietary data. Microsoft’s Productivity and Business segment grew 16% last quarter, and management expects to maintain similar growth this quarter.

Both the near-term and long-term look good for Microsoft, with strong growth for Azure and Microsoft 365 driving tremendous free cash flow despite huge capex. The stock currently trades for almost 33 times forward earnings estimates, which is certainly a premium to the market.

But with expectations for double-digit revenue growth, steady operating margins, and plenty of cash to buy back shares, the stock price looks more than fair.

2. Alphabet

Many expect AI to negatively affect Alphabet (GOOG 2.98%) (GOOGL 3.10%) as chatbots displace its core Google Search, but that’s yet to happen. Google Search revenue increased 12% year over year in its most recent quarter, accelerating from 10% growth in the first quarter.

That strength is driven by Google’s efforts to integrate generative AI into its search product. Its AI Overviews have driven higher engagement and user satisfaction, according to management. And AI-powered features like Circle to Search and Google Lens have increased search traffic for high-value products. Google’s new AI Mode pushes users into a more robust AI-powered search, similar to Perplexity.

The real growth driver for Alphabet is its cloud computing platform, Google Cloud. The business grew 32% last quarter and demonstrated strong operating leverage. Operating margin expanded to 21% from 11% last year and 18% last quarter. Based on earnings results from competitors, there’s still a lot of room to increase those margins as well.

Alphabet is also spending heavily to keep up with demand for its cloud AI services. Management increased its capex guidance for the full year to $85 billion from $75 billion.

That spending may be weighing on the stock, but the biggest things burdening Alphabet are regulatory concerns. Last year, the courts determined Google operates an illegal monopoly, and it faces remedies that could involve divesting key assets. Some have speculated it may have to sell Chrome, its web browser, for which Perplexity made an offer of $34.5 billion.

Despite the overhang, Alphabet shares look very attractive. The stock price is just 20 times forward earnings estimates. That’s below the S&P 500 average and the lowest among the “Magnificent Seven” stocks. That price more than factors in the uncertainty around Google and offers a significant discount on the fast-growing cloud computing business.

3. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (TSM 2.49%) has seen demand for its industry-leading chipmaking capabilities surge as companies like Microsoft and Alphabet look to stock their data center servers with high-end GPUs, networking chips, and other silicon. That has pushed the already high market share of TSMC (as it’s also known) to new levels, with the company commanding over two-thirds of all spending on contract semiconductor manufacturing.

TSMC’s massive technology lead benefits from a virtuous cycle. Its technology attracts big contracts from chip designers like Nvidia and Apple. In turn, it can invest more in building out capacity and developing the next-generation technology. That ensures that it’s well-positioned to win the next contract from those big customers while attracting new customers as well.

Just like Microsoft and Alphabet, TSMC is also spending heavily to meet demand for its services. Management expects to spend around $40 billion this year to build out capacity, including ramping up its next-generation 2nm node, which promises better performance while using less power. That capex budget is a 34% increase from last year.

After strong second-quarter results, management raised its full-year revenue growth guidance to 30% from the mid-20% range. The long-term outlook remains strong as well, with expectations for 20% average annual increases from 2025 to 2029. That number may be revised higher since it’s shown strength in the AI market, which is driving a good amount of that rise.

And TSMC’s gross margin has climbed close to 60%. While the company typically sees a drop in gross margin as it ramps up a new node, it’s already seeing strong demand for its 2nm chips and charging a hefty step-up in price. As a result, the company should be able to maintain very high gross margins in 2026 and beyond.

Investors can buy shares for just 23 times forward earnings, an exceptionally low price for a company growing this fast with a long runway ahead of it. Investors may be keeping the price low due to the threat of tariffs on the company’s finances. TSMC received an exemption from tariffs on semiconductors thanks to its huge investment in its Arizona manufacturing center.

Even if it is subject to tariffs in the future, TSMC remains the best-in-class chip manufacturer and an essential company in the future of AI. As such, it can blunt the financial impact, and it looks like a great buy at today’s price.

Artificial intelligence (AI) is a massive opportunity for investors. Just as the internet spawned several new industries, such as e-commerce and smartphones, AI will also create new industries in the next 20 years that don’t exist today.

Sticking with industry-leading tech companies that are enabling the AI revolution is all you need to do well. If you have a few thousand dollars you’re committing to a long-term investment plan, here are two AI stocks you can buy and hold for the long term.

Image source: Getty Images.

1. Taiwan Semiconductor Manufacturing (TSMC)

Shares of Taiwan Semiconductor Manufacturing (TSM 2.58%) have delivered outstanding returns for investors over many years. It’s the largest chip manufacturer in the world. Top AI companies like OpenAI and Alphabet‘s Google (GOOGL 3.10%) (GOOG 2.98%) are using TSMC to build their chips. This puts TSMC in a lucrative position to capitalize on the AI boom.

Importantly, TSMC’s long-term track record of delivering profitable growth is why you can sleep well at night investing in this stock. Over the last 10 years, revenue grew 14% on an annualized basis, and that includes a few soft demand cycles along the way, yet AI chip demand is causing revenue to accelerate. The company’s revenue grew 44% year over year in the most recent quarter.

The momentum continues to build for TSMC. For example, Google just announced its Tensor G5 AI chip will be made by TSMC and deliver improved performance for AI features on Google’s Pixel phones.

Meanwhile, ChatGPT maker OpenAI is tapping TSMC for its first custom AI chip. Given the lead times for making new chips, TSMC should be mass-producing OpenAI’s new chip in 2026. This is a positive indicator for TSMC’s future growth.

While some on Wall Street might be concerned about spending on AI infrastructure, including chips, running out of gas in the near future, the key signal for investors is that the largest tech companies continue to guide for more capital spending in data centers and AI infrastructure, which benefits TSMC. The company expects growth for advanced AI chips to increase more than 40% annually over the next five years.

Despite these demand trends, the stock is still reasonably priced. At a forward price-to-earnings ratio of 23, investors should continue to outperform the broader market with TSMC stock.

2. Alphabet (Google)

Alphabet is benefiting from multiple growth opportunities. The company hauled in $371 billion in trailing revenue over the last year from advertising, cloud computing, and AI. The stock also trades at a reasonable valuation that suggests it’s likely undervalued, especially as its cloud computing business continues to report strong growth.

Alphabet has more than 2 billion users across seven products, making Google one of the most valuable brands. Its investments in AI features are making its products more useful and driving solid gains for its core advertising businesses like Search and YouTube. Google Search reported another solid quarter of growth with ad revenue increasing by 12% year-over-year in Q2.

The company’s advantage in AI can be seen in the growth happening at Google Cloud. Cloud revenue grew 32% year-over-year last quarter, and this lifted the segment’s operating profit to $2.8 billion for the quarter, up from $1.2 billion in the same quarter last year. This shows businesses are increasingly choosing Google Cloud at a time when there is stronger competition than ever in the cloud market due to AI.

Alphabet said it will spend $85 billion in capital expenditures this year to meet cloud demand. Despite spending this huge amount on technology infrastructure, management expects the demand-supply situation for cloud services to remain “tight” entering 2026. This indicates incredibly strong demand that should see Alphabet’s cloud business continue to report high double-digit growth for the foreseeable future.

This echoes the strong demand for AI chips that TSMC is seeing in its business, and suggests that the AI opportunity is still in the early innings. Despite Alphabet’s strong competitive advantage with billions of people using its services every day, in addition to a booming enterprise cloud business, the stock trades at a reasonable forward P/E of 20. This makes Alphabet stock a solid long-term buy.

Investors have been very fortunate over the past couple of years. A tremendous run for technology stocks on artificial intelligence enthusiasm, investments, and rising long-term expectations has carried the broader stock market to impressive heights.

But it seems the market has begun to cool off over the past week or so, with some of the top-performing technology stocks dipping off their highs. As fun as soaring stock prices are, it’s crucial to remember that volatility is a regular part of long-term investing, and that it’s healthy when things take a bit of a breather after an extended run.

It can also be a good opportunity to buy your favorite stocks at lower prices. Three Fools got together to identify three winning tech stocks that still offer that right mix of long-term growth and present-day value. When it was all said and done, Nvidia (NVDA 1.65%), SoundHound AI (SOUN 2.70%), and Netflix (NFLX -0.20%) stood out from the crowd.

Here is what you need to know about each stock right now.

Image source: Getty Images.

This AI accelerator leader is not done rising

Will Healy (Nvidia): It seems nothing can hold back Nvidia’s stock price growth for long. The chip stock is up around 1,400% from its 2022 low as its research spearheaded the rapidly growing AI accelerator industry.

NVDA data by YCharts

That product has so fundamentally changed the company that its data center segment made up 89% of the company’s revenue in the first quarter of fiscal 2026. This is a dramatic turnabout from three years ago, when the data center segment was not significantly larger than Nvidia’s long-established gaming business.

Also, Nvidia’s profits have risen so dramatically that even with its massive gains, its P/E ratio is only about 56. In comparison, Advanced Micro Devices (AMD), whose stock has experienced much lower returns, trades at 94 times earnings.

Moreover, there are no meaningful signs of a slowdown. Grand View Research forecasts a compound annual growth rate (CAGR) of 29% for the AI chip market through 2030, and Nvidia has far exceeded that estimate.

In the first quarter of fiscal 2026, its revenue of $44 billion rose 69% from year-ago levels. Even though a company with a $4.2 trillion market cap is unlikely to sustain that growth rate, the aforementioned CAGR makes it likely to continue reporting robust revenue growth.

Additionally, competitive threats have not held it back. DeepSeek’s breakthrough on low-cost AI training earlier this year contributed to a temporary pullback of over 40% in the stock price, but Nvidia recovered quickly. Also, while AMD’s upcoming MI400 release next year could bring competition to Nvidia’s Vera Rubin platform, the company still has time to respond to that threat.

Indeed, Nvidia’s massive stock gains and huge market cap might deter some investors from buying. Nonetheless, with its domination of the AI accelerator market and the company’s relatively low P/E ratio, Nvidia stock remains on track for further growth.

A recent pullback in SoundHound AI stock could present an opportunity for long-term investors

Jake Lerch (SoundHound AI): My choice is SoundHound AI. Here’s why.

First, let’s put the recent downturn in context. It’s no surprise that the artificial intelligence (AI) sector is getting hit hard by the recent volatility in the stock market. Many of the stocks in this sector are young companies that are developing cutting-edge technology. Therefore, when the growth trajectory of the industry is questioned, sell-offs can be steep and sudden. Yet, these big sell-offs present an opportunity for long-term investors.

Turning to SoundHound AI specifically, let’s recall that the company is a leader within the voice AI sector. They have solid penetration within the automotive and restaurant sectors.

In addition, one of their primary competitive advantages is their ability to deploy custom voice AI solutions. What this means is that SoundHound works with companies to tailor their specific AI solutions, which are then deployed under the customer’s brand name. This gives SoundHound a leg up on some of its big tech competitors by allowing clients to maintain brand management and data privacy.

Last, let’s recall that only a few weeks ago, SoundHound posted a fantastic quarterly report. The company generated an all-time high of $43 million in revenue, which was up an eye-popping 217% from a year earlier. Management highlighted new or expanded business partnerships across the restaurant, automotive, healthcare, finance, and retail sectors. What’s more, the company raised full-year guidance.

According to Yahoo Finance, sell-side analysts now expect SoundHound to generate $166 million in revenue in 2025 and $215 million in 2026, representing growth of 96% and 29%, respectively.

In short, SoundHound remains a promising long-term investment within the AI sector, thanks to its solid growth trajectory. Growth-oriented investors might therefore want to consider it on this most recent pullback.

Netflix isn’t done delivering for shareholders

Justin Pope (Netflix): The streaming king has delivered in a big way for shareholders. Shares have risen over 70% over the past year, even after a recent 10% dip. While that’s not a very big drop, it’s still a dip long-term investors should consider buying.

One of the prettiest charts you’ll see is that of Netflix’s profit margins over time. As more people sign up for Netflix, the company becomes increasingly profitable because it can spread its content costs across more customers. Netflix stopped reporting subscriber numbers at the end of 2024, but paid subscriptions increased by 15.9% year over year in Q4 to 301.63 million, so new customer acquisition still had plenty of momentum at the end of last year.

NFLX Profit Margin data by YCharts

Additionally, Netflix is beginning to pull multiple growth levers. For instance, Netflix has raised its subscription prices over time and launched an ad-supported membership option a few years ago. It surpassed 70 million subscribers last November, and management expects ad revenue to double this year as some subscribers trade a little convenience for cost savings.

Meanwhile, the future looks bright. Netflix has waded increasingly deeper into live sports, a significant media category that could continue to help drive and sustain subscriptions. Analysts estimate Netflix will grow earnings by an average of almost 23% annually over the next three to five years. I wouldn’t say Netflix’s stock is a once-in-a-lifetime deal at 46 times 2025 earnings estimates, but the stock seems fairly valued for a business with such a strong growth outlook and increasingly fatter profit margins.

Investors who buy and hold Netflix will likely be very happy with their decision a few years from now.

The growth of artificial intelligence (AI) is the biggest opportunity in technology since the internet and PC adoption in the 1990s. Top tech companies continue to report surging demand across cloud services, software, and semiconductors.

Investors who choose wisely among the top companies benefiting from AI adoption could make a fortune over the next decade. Here are two top AI stocks to help you profit from this opportunity.

Image source: Getty Images.

1. Applied Digital

There is massive spending pouring into data center infrastructure for AI. But as AI advances, it creates potential bottlenecks in power requirements and data center capacity. This is a huge opportunity for Applied Digital (APLD 1.78%) — a small but fast-growing data center builder with a market cap of $3.7 billion.

The Dallas-based data center operator has delivered tremendous growth over the past few years. While quarterly revenue can be lumpy due to the timing of revenue recognition from new projects, revenue has grown from $55 million in fiscal 2023 to $215 million in fiscal 2025 (which ended in June), and it grew 41% year over year in the most recent quarter.

The stock is volatile, which is evident in the company’s large operating losses. This results from high upfront costs to build new data centers. In the most recent quarter, Applied Digital reported a loss of $26 million. But this is not concerning because demand is robust for more data center power, and Applied Digital stands ready to supply it.

Goldman Sachs has found that data centers currently have about 55 gigawatts of power capacity, with 14% being used for AI. By 2027, the global power used by data centers will increase to 84 gigawatts, with AI’s percentage increasing to 27%.

Applied Digital recently signed a 15-year lease agreement with AI hyperscaler CoreWeave to deliver 250 megawatts of power for CoreWeave’s Ellendale, North Dakota, data center campus. CoreWeave just recently extended this agreement to 400 megawatts. For Applied Digital, this will help generate approximately $7 billion in contracted revenue over the lease term, which is a big deal for the company’s value.

AI chip leader Nvidia held a $77 million stake in Applied Digital stock in the second quarter. This is a huge vote of confidence by Nvidia CEO Jensen Huang in Applied Digital’s strategy to capitalize on this opportunity. It’s still early in this market. Investors will have to endure volatility in the share price, but patiently holding over the next 10 years could have a big payoff.

2. Microsoft

Microsoft (MSFT 0.56%) is a highly profitable business that makes it a great complement to a volatile stock like Applied Digital. The software giant is on pace to eventually take the No. 1 market-share position in the cloud-computing market. It has a large offering of software products to capitalize on the growing demand for AI.

A big advantage of Microsoft is that many businesses and individuals are familiar with its software. Windows, Office, and Teams are software products widely used by millions, if not hundreds of millions of people. This puts Microsoft in a lucrative position to benefit from growing adoption of AI, as it rolls out advanced features in the form of subscriptions through Copilot.

On the enterprise side, Microsoft Azure is experiencing strong demand. Azure and other cloud services revenue grew 39% year over year in the June-ending quarter. This is double the growth that competitor Amazon Web Services is reporting, positioning Microsoft Azure to take the lead in the not-too-distant future.

Azure’s recent growth is an acceleration from the 33% growth rate reported in the previous quarter, signaling that demand for AI remains red hot. But this growth shouldn’t come as a surprise, since most of the world’s data is still stuck in on-premise servers. The arrival of AI is clearly incentivizing more businesses to migrate to the cloud to take advantage of cutting-edge tools that can improve their efficiency, and this will continue to benefit Microsoft.

But Microsoft isn’t stopping there. Quantum computing is the next growth opportunity for cloud computing. Microsoft is partnering with Atom Computing on a quantum computer built on Azure Elements, which will be shipping to customers by the end of 2025. Earlier this year, Microsoft unveiled its Majorana 1 quantum chip to solve the most complex computing problems, positioning it to be a top player in this burgeoning market.

The ability for Microsoft to benefit from AI demand while generating growing free cash flow makes it a solid investment. It generated $71 billion in free cash flow on $281 billion of revenue over the last year, which is driving the stock higher.

Arguably the most important data release of the entire third quarter is just days away. Following the closing bell on Wednesday, Aug. 27, Wall Street’s largest publicly traded company, and the innovative leader fueling the evolution of artificial intelligence (AI), Nvidia (NVDA 1.65%), will report its fiscal second-quarter operating results (its fiscal year ends in late January).

No technological advancement has been hotter on Wall Street than AI. Empowering software and systems with AI so they can make split-second decisions and grow more efficient over time without human intervention is a game changer that can accelerate growth in most industries around the globe. In Sizing the Prize, analysts at PwC pegged the economic impact of AI at $15.7 trillion come 2030.

While an approximately 1,100% increase in Nvidia’s stock since the start of 2023 signals that the company is firing on all cylinders, a case can be made that the face of the AI revolution is priced for perfection in a market and trend that are anything but perfect. Despite its near-parabolic ascent, Nvidia will likely struggle to live up to Wall Street’s sky-high expectations on Aug. 27.

Image source: Nvidia.

Margins will be in the spotlight and likely act as a drag

In terms of AI-graphics processing units (GPUs), Nvidia has been the kingpin. Its Hopper (H100) and Blackwell GPUs have been deployed more than any other chips in high-compute data centers, with the respective compute capabilities of Nvidia’s hardware standing tall when compared to the competition.

But what’s been even more important than Nvidia’s competitive advantages is persistent AI-GPU scarcity.

The law of supply and demand states that when demand for a good or service outpaces its supply, the price of said good or service will climb until demand tapers. With an impressive backlog for its AI-GPUs, Nvidia has been able to command a premium price for its hardware, which in turn sent its generally accepted accounting principles (GAAP) gross margin to a high of 78.4% during the first quarter of fiscal 2025. As long as this AI-advanced chip scarcity persists, Nvidia’s gross margin is golden.

The problem for Nvidia is that it’s no longer the only rodeo in town. Advanced Micro Devices and China-based Huawei are external competitors that are actively ramping up production of their data-center chips. However, the biggest threat to Nvidia’s GAAP gross margin potentially comes from within.

NVDA Gross Profit Margin (Quarterly) data by YCharts.

Nvidia’s top customers, in terms of net sales, have consistently been members of the “Magnificent Seven.” Most of these leading clients are internally developing AI GPUs and solutions to use in their respective data centers. Even though these chips are no threat to Nvidia’s compute advantages, they are considerably cheaper and not backlogged like Blackwell. In my view, it’s inevitable that internal chip development will cost Nvidia precious data center real estate.

More importantly, this internal development is working against the AI-GPU scarcity that Nvidia has held so dear. As the insatiable demand for AI-accelerating chips calms, Nvidia should see its pricing power and GAAP gross margin fade over time. We’ve already been witnessing steady gross margin erosion for more than a year.

Nvidia will have a difficult time justifying its valuation in multiple respects

In addition to gross margin being front and center, Nvidia is going to have a near-impossible task of justifying its valuation premium amid a historically pricey market.

To be abundantly clear, I believe Nvidia is deserving of a valuation premium thanks to its competitive advantages. The issue, while subjective, is how far this premium can be stretched before it becomes excessive.

Historical precedent tells us that industry leaders of next-big-thing trends have a relatively short leash when it comes to extended valuations. Prior to the bursting of the dot-com bubble a quarter-century ago, prominent internet leaders like Cisco Systems, Microsoft, and Amazon peaked at price-to-sales (P/S) ratios ranging from 31 to 43, respectively. Except for Palantir Technologies, whose P/S ratio recently entered a separate orbit, no megacap company on the leading edge of a game-changing technology has been able to maintain a P/S ratio in the 30 to 40 range for a substantial length of time.

Less than a week ago, Nvidia’s trailing-12-month P/S ratio was hovering north of 30. While its P/S ratio will decline a bit when it reports projected year-over-year sales growth of 53% in the fiscal second quarter, it’ll still be tipping the scales at a multiple that’s far above anything that’s been historically sustainable.

On top of being individually pricey, Nvidia is one of a handful of high-growth tech stocks that have lifted the S&P 500‘s (^GSPC 1.52%) Shiller price-to-earnings (P/E) ratio to its third-highest multiple during a continuous bull market when back-tested 154 years. Previously documented occasions when the stock market was this expensive were eventually followed by declines of 20% or more in the benchmark S&P 500.

Pardon the pun following the gross margin discussion above, but there’s simply no margin for error.

Image source: Getty Images.

Historical precedent is an undeniable worry for Wall Street’s leading AI stocks

The final piece of the puzzle that helps explain why Nvidia is positioned to disappoint come Aug. 27 (and beyond) has to do with history.

For the better part of the last three decades, investors have been privy to no shortage of next-big-thing trends and game-changing innovations. While many of these trends went on to positively impact corporate America, including the advent of the internet, all endured early-stage bubble-bursting events.

The problem with hyped innovations is that investors consistently overshoot when it comes to widespread adoption timelines and early-stage utility. For example, businesses didn’t fully understand how to make the internet revolution work in their favor until many years after it went mainstream. It takes time for game-changing innovations to mature, which makes it unlikely that artificial intelligence has done so in a little over two years.

While demand for AI-data center infrastructure and AI software has been impressive, most businesses aren’t yet optimizing their AI solutions, nor are many generating a positive return on their AI investments. These are telltale signs that investors have, yet again, overestimated how impactful artificial intelligence will be, at least in the early going.

No megacap company’s growth has been more reliant on investor euphoria surrounding the evolution of AI than Nvidia, which has added close to $4 trillion in market cap in less than three years. Even the slightest hiccup can disrupt this hype.

To reiterate, Nvidia is a solid and time-tested company that isn’t going anywhere. But it’s far from perfect — and perfection is all Wall Street will settle for at this point.

In just a little under one week, Nvidia (NVDA 1.65%) will report its earnings for Q2 2025.

For the most part, analysts are optimistic about the report, due out after the close of trading on Aug. 27. Consensus forecasts have the semiconductor company growing earnings 48.5% year over year, to $1.01 per share, as insatiable demand for artificial intelligence (AI) chips drives a near-53% rise in revenue to almost $46 billion.

That’s a lot of money Nvidia will be raking in for a single quarter. This is one of the primary reasons why a staggering 58 analysts polled by S&P Global Market Intelligence give Nvidia stock either a “buy” or an “outperform,” or an equivalent rating — versus only one single analyst who says “sell.”

Image source: Getty Images.

One reason why two analysts are worried about Nvidia

And yet, not everything’s unicorns and rainbows for Nvidia stock. As the final countdown to earnings day begins, two separate Wall Street analysts chimed in Wednesday morning to raise reservations about Nvidia stock and the challenges that lie ahead for it.

First up was Deutsche Bank, where analyst Ross Seymore set a price target of $155 that implies the stock could fall 12% over the next 12 months. Ordinarily, the prospect of a 12% near-term loss in a stock would inspire an analyst to recommend selling that stock. But perhaps fearing to deviate too far from the herd on this popular AI stock, Seymore only reiterated a “hold” rating on Nvidia. (Seymore is still one of only a half-dozen analysts with neutral ratings on Nvidia).

No matter. Whether any one analyst thinks Nvidia is a “buy” or just a “hold” probably shouldn’t concern us as much as why he rates the stock as he does. And in Seymore’s case, the answer couldn’t be clearer:

Writing on StreetInsider.com on Wednesday, Seymore warns that U.S. trade restrictions on semiconductor exports to China will cost Nvidia about $8 billion in “foregone” revenue in Q2. True, a resumption of shipments upon receiving export licenses from the Trump administration should help rectify this situation by Q3. But there’s a cost to that solution — specifically, the Trump Administration’s requirement that, to obtain export licenses, Nvidia must fork over 15% of any revenue it generates in China to the IRS.

With China accounting for roughly $17 billion of Nvidia’s revenue over the last 12 months, that could amount to a $2.6 billion drag on Nvidia’s profits over the next 12 months.

KeyBanc chimes in

Investment bank KeyBanc shares Deutsche Bank’s concerns about Nvidia and China. On the one hand, KeyBanc anticipates Nvidia could book $2 billion to $3 billion in revenue from selling H20 and B40 chips in China next quarter. On the other hand, the banker believes this revenue is unreliable and dependent upon the receipt of export licenses from Washington.

For this reason, KeyBanc warns Nvidia may “exclude direct revenue from China” when giving revenue guidance next week, potentially creating a kind of guidance miss that could send Nvidia shares lower.

KeyBanc also cites the “potential 15% tax on AI exports” from the U.S. side as a risk, and adds that “pressure from the [Chinese] government for its AI providers to use domestic AI chips” could dampen Nvidia’s China revenues even further — adding a third risk that Deutsche didn’t mention!

Finally, some good news

Now, I hope I haven’t painted too bleak a picture for you here. Fact is, despite his reservations, Deutsche analyst Seymore still expects Nvidia to report a “typical” earnings beat next week, exceeding the company’s $45 billion revenue forecast by about $2 billion. Blackwell revenue is ramping, says Seymore, more than doubling sequentially between Q4 2024 and Q1 2025, to $24 billion.

With the prospect of an imminent earnings beat, it makes sense that Seymore would hesitate to recommend selling Nvidia stock — even if he does feel it’s a bit overpriced.

Furthermore, KeyBanc agrees that Blackwell production is ramping, and a new Blackwell Ultra (B300) chip is on the way, potentially boosting revenue even more in Q3. For these and other reasons, KeyBanc not only still rates Nvidia stock “overweight” (i.e., buy). KeyBanc actually raised its price target on the stock to $215 on Wednesday.

So, is Nvidia stock a buy or not?

That’s the real question, isn’t it? Wall Street’s confident Nvidia will “beat” on Q2 next week. It’s just worried that Nvidia will “miss” on guidance for Q3. Longer-term, though, is Nvidia stock a buy or isn’t it?

Here’s how I look at it, and I’ll keep this really simple:

Valued at 4.28 trillion dollars, earning nearly $77 billion in annual profit, and backing that up with roughly $72 billion in annual free cash flow, Nvidia stock costs about 55 times trailing earnings and about 59 times free cash flow. For Nvidia stock to be a clear-cut buy, I’d want to see the stock growing earnings at least 50% annually over the next five years.

The best that Wall Street analysts expect Nvidia to do, however, is 30% annual growth — even with nine out of 10 analysts polled saying Nvidia stock is a buy.

The math here isn’t hard. Nvidia stock is not a buy at this price — but it might be if it sells off after earnings.

In the last year, a narrative has formed around stablecoins disrupting cross-border payment fees. With the initial public offering (IPO) of Circle Internet Group and growing adoption of these fiat-backed cryptocurrencies, many investors have claimed that the traditional days of cross-border payments are behind us. This has sent shares of mobile remittance player Remitly Global (RELY 2.31%) down 30% from highs set earlier this year.

As a business that makes money on cross-border payment fees, Remitly could be threatened by stablecoins. But is it truly at risk? A new announcement from Remitly around stablecoins could be huge news regarding this narrative, and may turn stablecoins into a beneficiary for the business. Time to take a closer look at Remitly stock and see whether investors should buy the dip on this hated remittance player today.

Disrupting the stablecoin narrative

Along with its Q2 earnings report (which will be covered below), Remitly announced new products that its 8.5 million active customers can use earlier this month. First is the Remitly Wallet, a digital wallet through Remitly where customers can hold currencies instead of just sending them from a bank account. Importantly, stablecoins are included in the currencies customers can hold.

Second, Remitly is using payment provider Stripe to help fund remittance transactions on the platform with stablecoins. This expansion in the number of ways people can send and receive money through Remitly will make the platform more valuable for users, which should drive more customer adoption. Lastly, Remitly is utilizing stablecoins on its balance sheet to help move money across border in real time when funding transactions for users, which should reduce its operating costs while again improving the customer value proposition of the platform.

More growth and reduced costs should mean more profits for Remitly going forward.

Image source: Getty Images.

Strong growth and market share gains

The last quarter was stellar for Remitly. Revenue grew 34% year-over-year to $412 million on the back of 40% send volume growth, with positive net income of $6.5 million. If people are utilizing stablecoins to bypass Remitly’s remittance platform, it is not showing up in the numbers yet. The company is barely generating a profit, but that is because of all the new products its team is building, along with heavy marketing spend to acquire new users. Both are worthwhile buckets to pour money into as long as new customers keep joining Remitly and revenue is growing at this blistering rate.

As a disruptor in remittance payments, Remitly is gaining a ton of market share by stealing customer spending from the likes of Western Union. Legacy players are seeing declining send volumes as more customers adopt mobile native solutions like Remitly. The story is not over yet, though, with Remitly having an estimated market share of below 5% in total remittance payments around the world. Its revenue from outside North America has grown at close to 100% year-over-year and hit $350 million over the last 12 months.

RELY Gross Profit Margin data by YCharts

Why Remitly stock is a buy today

Despite this massive growth tailwind, investors are still discounting Remitly stock, likely due to the stablecoin disruption narrative and recent immigration changes in the United States. Immigration has been a headwind to the overall remittance market in recent quarters but has not impacted Remitly’s growth whatsoever, which is a good sign for the market share gainer.

At today’s price of $19 a share, the stock has a market cap of $3.9 billion. It is generating revenue of $1.46 billion and growing quickly, with room to double overall sales within a few years time to $3 billion. With gross profit margins of 58%, Remitly has plenty of room to expand its bottom-line net income margin. A figure of 20% is entirely reasonable over the long haul. $3 billion in revenue and a 20% net income margin is $600 million in net income, which would be a forward price-to-earnings ratio (P/E) of just 6.5 based on the current share price.

A future P/E below 10 in just a few years makes Remitly significantly undervalued at today’s share price, which is why the stock is a buy after its recent drawdown.

Billionaire Bill Ackman was busy in the second quarter, investing in two of the world’s largest tech companies. His hedge fund, Pershing Square Capital, started a new position in Amazon (AMZN 3.12%) and boosted its stake in Alphabet (GOOGL 3.10%) (GOOG 2.98%).

Ackman is a well-regarded investor known for running a concentrated portfolio: As of June 30, Pershing Square Capital’s portfolio had only 10 companies in it. So when it makes a big investment, it’s worth it for retail investors to pay attention and consider whether they want to follow.

Amazon

Pershing established a new position in Amazon in the second quarter, picking up 5.8 million shares. That made it the fund’s fifth-largest holding, accounting for 9.3% of its value as of Aug. 14.  

Amazon’s logistics network has always been the backbone of its e-commerce business, and now the company is employing artificial intelligence (AI) and even more robotics than before to make it even more efficient. The company is applying AI to such tasks as optimizing delivery routes, stocking warehouses more effectively, and directing drivers to hard-to-find drop-off locations in places like large apartment complexes.

Meanwhile, the company now has over 1 million robots working in its fulfillment facilities, and they’re being carefully orchestrated by its Deepfleet AI model. Its newer robots can do more than just lift heavy packages. Some can spot damaged goods better than humans (which lowers the number of returns), while some can even repair themselves. All of this saves money and speeds up shipping times.

AI is also strengthening Amazon’s advertising unit. Merchants can use its AI tools to create better product listings and ad campaigns. Advertising is a high-margin business that also has been one of the company’s fastest growing, with revenue up 23% last quarter.

Altogether, AI is helping drive strong operating leverage in Amazon’s e-commerce operations. Last quarter, its North American segment’s revenue rose 8% while its operating income climbed 16%. That kind of leverage is exactly what investors want to see.

Amazon’s cloud computing division, AWS, meanwhile, remains its most profitable segment and its fastest-growing. The company created the cloud infrastructure market and still holds a nearly 30% share of it. AI is now a major driver in that segment, too. Services like Bedrock and SageMaker allow customers to build and run models directly on AWS, while it recently introduced Strands and Agentcore to help customers build AI agents and safely run them in a secure, server-less environment. Meanwhile, the company’s custom-designed AI accelerator chips, Trainium and Inferentia, give it an edge in cost and performance. AWS continues to grow quickly: Revenue climbed 17.5% last quarter to $30.9 billion

Amazon is spending heavily on AI infrastructure, but history shows the company has a knack for winning big when it spends big. Trading at a forward price-to-earnings (P/E) ratio of about 30 based on analysts’ consensus 2026 estimates, the stock still looks appealing, particularly given its growth runway.

Alphabet

Amazon wasn’t the only tech stock Pershing was buying in the second quarter. It also picked up another 925,000 shares of Alphabet’s Class A stock. That increased its total stake in the company (which includes both Class A and Class C shares) by 8.6% to almost 10.8 million shares. Based on the latest public information, that made it the hedge fund’s third-largest holding, accounting for 15% of its value as of Aug 14.

Investors have worried that the growing use of AI chatbots will chip away at Alphabet’s Google Search business, but so far, that hasn’t happened. In fact, last quarter, Google Search’s revenue growth accelerated, increasing by 12% year over year to $54.2 billion. Alphabet has also built AI into its products. More than 2 billion people are already using AI Overviews in Google Search, and its new AI Mode is just starting to gain traction. The company is also using AI to advance its tools beyond simple text queries, with Google Lens and Circle to Search standing out as two prime examples. New commerce-focused tools like Shop by AI should also create new monetization opportunities for the company.

One key aspect of Alphabet’s competitive moat is distribution. Chrome currently controls two-thirds of the browser market, while its Android operating system runs more than 70% of smartphones. That makes Google the first touchpoint to the internet for billions of users. It also gives Alphabet a huge volume of data and search query histories that it can then funnel into its massive ad network.

Cloud computing is another big growth driver for Alphabet. Google Cloud’s revenue jumped by 32% in Q2 while its operating income more than doubled. Customers are drawn to Alphabet’s Gemini models, Vertex AI platform, and its custom-designed tensor processing units (TPUs). These TPUs lower costs for AI workloads and give Google Cloud a cost advantage. The business has finally reached scale and is now showing strong operating leverage.

Image source: Getty Images

Alphabet also has longer-term bets. It’s deploying its Waymo unit’s robotaxis into new cities as the driverless ride-share business shows strong momentum. Meanwhile, with its Willow quantum computing chip, it has made meaningful progress on error-reduction — one of the core challenges in quantum computing technology. These businesses are a long way from being mature, but their upside potential is enormous.

Despite all of this, Alphabet trades at just 19 times analysts’ 2026 earnings estimates. That is cheap for a company that’s an established leader in search, cloud, video streaming, mobile, and AI infrastructure. Among the big AI stocks, Alphabet looks the most attractively valued.

Solid buys

In my view, Amazon and Alphabet look like solid buys for long-term investors. While the stocks aren’t without risks, given their market positioning and current valuations, I think it makes sense to follow Ackman’s lead and own both stocks.

Are you a Walmart (WMT -1.18%) person or a Costco (COST -1.18%) person?

When it comes to shoppers, the two groups tend to be mutually exclusive, with many Americans swearing by one and swearing off the other.

But for investors, the question is a bit different: They want to know which they should put money into.

And that question is more relevant today than it’s been in a while. Many economists expect President Trump’s tariffs to start pushing the price of groceries — from bananas and coffee to soda and beer — higher in the coming months. The Tax Foundation expects tariffs to impact nearly 75% of U.S. food imports.

If and when prices of groceries rise, both Walmart and Costco are expected to benefit, as many Americans will trade down to retailers that emphasize low prices. Plus, because they’re so large, both retailers have significant supply chain leverage that should allow them to push back on higher prices from suppliers — to an extent, at least.

Image source: Getty Images.

Walmart is quite a bit larger than Costco, with a market cap of $778 billion, versus $441 billion for Costco. Walmart has more than 10,000 stores on four continents and is the world’s largest retailer by sales. Costco is the world’s third-largest retailer; it has a membership model, with roughly 900 locations and 79.6 million paid household members and 37.6 million paid executive memberships. While they sell all kinds of items, Walmart and Costco rank as grocery behemoths.

Costco stock is up roughly 6% this year as of Aug. 21 and 181% over the past five years, while Walmart stock has gained roughly 8% year-to-date and 123% over five years.

Strong inflation era results

Walmart and Costco often do well when inflation pushes prices higher and shoppers look for bargains.

From January 2022 to February 2023, when year-over-year headline inflation ranged from 6% to 9.1%, Walmart kept the increase in grocery prices to 3%, compared to average price increases of 7.5% or more at rivals like Amazon, Kroger, and Target, according to a Reuters analysis. Walmart’s size and buying power help it force suppliers to keep prices lower.

As a result, in its fiscal 2024, ended Jan. 31 of that year, Walmart grew total revenue in constant currency 6% to $648 billion and its adjusted earnings per share 5.7% higher to $6.65. In the 52 weeks following that earnings announcement, Walmart shares climbed 66%.

Costco, on the other hand, makes a large percentage of its profits from membership income — membership fees totaled about 65% of net income in the most recently reported quarter. That business model — along with a reputation for good deals — helps steady the company’s results during an inflation spike. In its fiscal 2023 (ended Sept. 3 of that year), Costco saw U.S. net sales grow 6.7% to almost $238 billion. Membership fees increased 8% that year, to $4.58 billion.

In the 52 weeks after that earnings release, Costco stock rose 63%.

And just recently, in its third quarter of 2025, the retailer reported a 10.4% increase in its membership fee income, to more than $1.2 billion. Last September Costco raised membership fees by $5, to $65 a year, yet it saw no meaningful decline in members after the increase.

Both businesses and their stocks benefit from rising overall prices because they’re able to either keep prices lower than the competition (Walmart), which drives sales, or rely on membership fees (Costco) that drive profits.

What does the future hold?

So which stock should you invest in today in anticipation of rising grocery prices in the months ahead?

Well, stock prices ultimately track earnings growth. And analysts expect Costco to increase earnings per share for the current quarter by 10% (results will be released on Sept. 25).

As for Walmart, the retail behemoth released its second-quarter results this week and they were slightly disappointing. Adjusted earnings per share of $0.68 were lower than the average analyst estimate of $0.73, and that sent the stock 5% lower on Thursday. Revenue, however, came in at $177.4 billion, almost $2 billion higher than estimates.

Thus, the picture is mixed. Rising grocery prices will impact all U.S. retailers, and both Costco and Walmart have a history of thriving when that happens. With the uncertainty of Trump’s tariff policies still high, however, Costco’s membership-driven model may put it in a more advantageous position going forward.

I’ve been standoffish on SoundHound AI (SOUN 2.70%) for almost a year now. I love what the company is doing and see tremendous long-term value in the stock, but the share price has been way too rich since a meme stock surge in December 2024.

The worst of last year’s overheating has subsided, and SoundHound AI keeps making strides in its business results. Is the stock a good investment at this point?

Let’s take a look.

SoundHound AI by the numbers

I can’t ignore one simple fact: This is still an expensive stock.

SoundHound AI trades at a lofty 38 times trailing sales, and its profits are consistently negative. I mean, the company reported a $78 million operating loss in the second quarter of 2025, based on $42.7 million in top-line revenues.

Some of that financial pain comes from noncash accounting adjustments, but there’s some real substance to other line items. The cost of revenues rose from $5 million to $26 million. Sales and marketing expenses nearly tripled.

As a result, SoundHound AI is burning actual cash, too. Operating cash flow was -$18.5 million. So the company is keeping the lights on (and building a robust cash reserve, in all fairness) by selling new shares while they’re pricey.

And that’s not good news for existing shareholders such as yours truly. The diluted share count rose by 21% over the last year, undermining the effective stock returns by a similar percentage.

Can SoundHound AI’s upside outweigh the crushing downsides?

So far, not so good. SoundHound AI’s stock trades at a nosebleed-inducing price despite weak revenues and deep bottom-line losses. What’s the upside to this artificial intelligence (AI) stock, then?

SoundHound AI is growing at a blistering pace. The skyrocketing administrative expenses are a necessary increase, since second-quarter revenues more than tripled year over year. And thanks to the cash-boosting combination of high share prices and high-volume sales of new stock, SoundHound AI can afford partnerships, acquisitions, and product development projects that used to be out of reach.

Moreover, most of the soaring sales are tied to long-term service deals or subscription-style contracts. The company used to report order bookings in every quarterly business update, last reported at $1.2 billion of unfilled long-term contracts by the end of 2024. Due to volatile shifts in this metric, management will only report it at the end of each fiscal year in the future.

But this is the meat and potatoes of SoundHound AI’s revenue growth recipe — a billion-dollar balance of subscriptions that will convert into actual revenues over a multiyear period. Including this incoming pile of future revenues in your market-value calculations makes SoundHound AI’s stock more palatable. With a $5 billion market cap today, the stock trades at approximately 4.2 times the latest backlog balance.

Image source: Getty Images.

Should you buy, sell, or hold SoundHound AI today?

SoundHound AI’s business is growing by leaps and bounds. Its AI-driven voice controls are useful for carmakers, drive-thru window services, and phone-based menu systems, just to name a few target markets. I can imagine this company evolving into a tech giant with a large market footprint — but it could take many years to reach that pinnacle.

Many things could go wrong in the meantime. The heavy stock dilution is one troublesome concern. And SoundHound AI’s technology is today’s top of the line, but what if someone else develops an equal or even stronger alternative? That all-important order backlog could dry up if this hypothetical rival starts snagging every available business opportunity.

So it’s a risky investment today, and I don’t think the market makers are accounting for these potential downsides in SoundHound AI’s current valuation. I’m not selling my existing shares, but I’m not reaching for the “buy” button either. At this point, SoundHound AI falls right in the middle of the classic buy, hold, or sell ratings scale. Your mileage may vary, depending on your appetite for unprofitable sales growth.

At the moment, just 11 publicly traded companies can claim a market capitalization above $1 trillion.

That elite trillion-dollar club includes tech juggernauts such as Nvidia (NVDA 1.65%), Microsoft, Apple, Alphabet, Amazon, Meta Platforms, Broadcom, Taiwan Semiconductor, Tesla, along with Warren Buffett’s diversified conglomerate Berkshire Hathaway and oil giant Saudi Aramco.

Among them, Nvidia reigns supreme. With a market cap of roughly $4.4 trillion, it’s the most valuable company in the world.

Not only do I think Nvidia is positioned to maintain that crown, I also expect it to remain worth more than Tesla, Berkshire Hathaway, and ambitious AI player Palantir Technologies combined over the next five years, thanks in no small part to the transformative potential of its quantum computing business.

Quantum computing is the next frontier of AI

Quantum computing is widely regarded as the natural successor to classical computing. Traditional computers store and process information in binary formats — 0s and 1s. Quantum machines use qubits — units that can have values of 1 or 0, but also can exist in complex linear states that are combinations of 1 and 0 through a phenomenon known as superposition. 

In theory, this gives quantum computers the ability to rapidly tackle problems that would take today’s most advanced supercomputers prohibitive amounts of time to solve — from cracking high-level cryptography to drug discovery to climate modeling.

Although the quantum computing industry remains in its infancy, expectations are sky-high. Global management consulting firm McKinsey & Company projects that breakthroughs in quantum applications could generate trillions in economic value over the coming decades.

Image source: Getty Images.

How Nvidia is playing a critical role in the quantum era

A wave of smaller innovators is attempting to make headway in the quantum computing landscape, exploring avenues such as trapped-ion technology, annealing, and photonic qubits in a race to unlock the next generational breakthrough.

Nvidia, by contrast, isn’t positioning itself as a singular hardware architecture. What investors may not fully appreciate is that the company is already deeply embedded in the quantum ecosystem. Its graphics processing units (GPUs) are increasingly being used to run advanced simulations, particularly in hybrid systems that bridge quantum and classical computing.

Yet Nvidia’s true differentiator lies not in hardware but in software. The company’s CUDA computing platform, long the backbone of AI infrastructure, is now being adapted into CUDA-Q — a platform designed to support quantum applications on the next generation of processors.

By building this bridge between hardware and software, Nvidia is positioning itself as an indispensable layer for scaling quantum development, regardless of which architectures and approaches succeed and reach critical scale. This strategy gives the company asymmetric exposure to AI’s next trillion-dollar opportunity, reinforcing its potential for continued valuation expansion over the long term.

Why Berkshire, Tesla, and Palantir could lag through 2030

Against this backdrop, it’s worth examining the valuation profiles of the three companies that I don’t expect even combined to surpass Nvidia in the next five years.

• Berkshire Hathaway: As a mature and diversified conglomerate, Berkshire is now widely regarded as a steady compounding machine rather than a disruptive, growth-oriented force reshaping industries. Investors typically refrain from assigning premium multiples to businesses of this type. While it certainly has upside potential and the opportunity to generate respectable returns over the next five years, Berkshire’s valuation profile lacks the explosive appeal of Nvidia.
• Tesla: Tesla already carries a frothy valuation fueled by investor enthusiasm for its AI-driven ambitions — most notably its plans for a robotaxi fleet and its humanoid robot, Optimus. The challenge, however, is that the scalability of these initiatives remains unproven. Both the autonomous vehicle and robotics markets are highly competitive, and Tesla risks a sharp valuation reset if investors begin to lose patience with the company’s execution or management’s ability to deliver on its aggressive timelines.
• Palantir: Palantir has successfully branded itself as a mission-critical enterprise software provider, uniquely positioned to capture the flow of AI investment as it moves downstream from infrastructure to applications. Still, challenges remain. The company faces formidable competition from Microsoft, fast-growing unicorn Databricks, and specialized players like BigBear.ai and C3.ai. Palantir’s investment profile over the next several years looks vulnerable. With its valuations already stretching beyond their historical norms, any news that shows a misalignment between investors’ lofty expectations and the reality of Palantir’s growth fundamentals could send the stock plummeting.

In 2030, Berkshire will likely remain a durable pillar of investment stability. Meanwhile, Tesla and Palantir may dazzle intermittently, but if they cannot keep pace with the dynamics of their respective competitive landscapes, investors’ enthusiasm for them could wane.

On the other hand, by the start of the next decade, Nvidia could occupy a key position at the intersection of AI and quantum computing. With the potential to become a core player in that hardware and software ecosystem, Nvidia represents the ultimate technology stack of the quantum era. If it succeeds there, that would allow it to justify a valuation that could easily eclipse many of today’s industry leaders combined.

You try to buy a kilo of flour in Gaza.

You open your wallet; what’s inside?  A faded 10-shekel note, barely held together by a strip of tape. No one wants it; it is all rubbish now.

The 10-shekel note, normally worth about $3, was once the most commonly used bill in daily life. Now, it is no longer in circulation. Not officially—only practically. It has been worn out beyond recognition. Sellers will not accept it. Buyers cannot use it.

There is no fresh cash. No replenishment.

Other banknotes are following the fate of the 10 shekels, especially the smaller ones.

If you pay with a 100-shekel note for an 80-shekel purchase, the seller will likely be unable to return the remaining 20 due to the poor physical state of the banknotes.

Many notes are torn or taped together, and entire stalls now exist just to repair damaged currency so it can be used again. Anything is better than nothing.

But the disintegration of banknotes is not the only problem we have in Gaza.

Civil servants have gone months without pay. NGOs are unable to transfer salaries to their employees. Families cannot send remittances. What once supported Gaza’s financial structure has vanished. There is no mention of when it will return. Just silence.

Money is stuck. Trapped behind closed systems and political barriers.

If you manage to obtain money from outside sources — perhaps from a cousin in Ramallah or a sibling in Egypt — it comes at a cost. A brutal one. If you get sent 1,000 shekels ($300), the agent will hand you 500. That’s right, the commission rate on cash withdrawals in Gaza is now 50 percent.

There are no banks to offer such withdrawals or oversee transfers.

The signs are still there. Bank of Palestine. Cairo Amman Bank. Al Quds Bank. But the doors are shut, the windows are dusty, and the inside is empty. No ATMs work.

There are only brokers, some with connections to the black market and smugglers, who are somehow able to obtain cash. They take huge cuts to dispense it, in exchange for a bank transfer to their accounts.

Every withdrawal feels like theft disguised as a transaction. Even so, people continue to use this system. They have no choice.

Do you have a bank card? Great. Try using it?

There is no power. There’s no internet. No POS machines. When you show your card to a seller, they shake their head.

People print screenshots of account balances that they cannot access. Some walk around with expired bank documents, hoping someone will think they’re “good enough” as a pay guarantee.

Nobody does.

There are a few sellers who accept so-called “digital wallets”, but those are few, and so are people who have them.

In Gaza today, money you can’t touch is equivalent to no money at all.

And so people have to resort to other means.

At the market, I saw a woman standing with a plastic bag of sugar. Another was holding a bottle of cooking oil. They did not speak much. I just nodded. Traded. Left.

This is what “shopping” in Gaza looks like right now.  Trade what you’ve got. A kilo of lentils for two kilos of flour. A bottle of bleach for some rice. A baby’s jacket for several onions.

There is no stability. One day, your item will be worth something. The next day, nobody wants it. Prices are guesses. Value is emotional. Everything is negotiable.

“I traded my coat for a bag of diapers,” my uncle Waleed, a father of twins, told me. “He looked at me as if I were a beggar. I felt like I was giving up a part of my life.”

This is not a throwback to simpler times. This is what happens when systems disappear. When money dies. When families are forced to sacrifice dignity for survival.

People don’t just suffer—they shrink. They lower their expectations. They stop dreaming. They stop planning. What future can you plan when you can’t afford tomorrow?

“I sold my gold bracelet,” Lina, my neighbour by tent, told me. “It was for emergencies. But now, every day is an emergency.”

Gaza’s economy did not collapse due to bad policy or internal mismanagement. It was broken on purpose.

The occupation has not just blocked goods entering Gaza; it has also blocked currency and with it, any sense of financial control. It has destroyed the banking system. It has made liquidity a weapon.

Cutting off Gaza’s money is part of a larger siege. There is no need to fire a bullet to destroy a people. Simply deny them the ability to live.

You can’t pay for bread, for water, for medicine, so how do you sustain life?

If this trend continues, Gaza will be the first modern society to completely return to barter. There are no salaries. There is no official market. Only personal trades and informal deals. And even those will not last forever. Because what happens when there is nothing left to trade?

If this isn’t addressed, Gaza will be more than just a siege zone. It will be a place where the concepts of money, economy, and fairness will die forever.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.

Tesla (TSLA 6.18%) has dominated the electric vehicle (EV) market for over a decade, but the company’s core business has begun to struggle. Rivian Automotive (RIVN 7.80%), meanwhile, is still in the early innings as an automaker, but is starting to hit important milestones.

Both stocks come with risk, but one has a much better setup for investors right now.

Rivian’s R2 opportunity

Rivian slipped back into negative gross margins in Q2 after two straight positive quarters, with higher material costs due to supply constraints and new tariffs taking their toll. The loss of the federal $7,500 EV tax credit this fall will be another drag. Those are real headwinds, but they don’t take away from the progress that Rivian has been making.

Building out a profitable EV business is not easy, with even major automakers often struggling to sell their EV models for a profit. However, Rivian took a big step in this direction when it switched to a zonal architecture. This slashed the number of electronic control units and wiring in its vehicles, making its SUVs cheaper to build. It also helped the company secure a major partnership with Volkswagen, which opened up its checkbook to gain access to the technology and form a joint venture.

The next big step for Rivian will be launching its new, smaller R2 SUV next year. At a starting price of around $45,000, it will target a much broader audience than the R1 luxury line, which costs over $100,000 for some versions. Importantly, Rivian has locked in costs through supplier contracts and expects the R2 to deliver stronger margins through lower material costs, higher volumes, and shared fixed expenses with its R1 and electric delivery van lines.

On the financial front, Rivian is backed by Amazon, which uses its delivery vans, and it still has more cash coming from Volkswagen if and when certain milestones are reached. It has also secured a $6.6 billion loan from the Department of Energy to help build a second U.S. plant. With $7.5 billion in cash and short-term investments, the company has plenty of capital to support the R2 launch. Management is targeting earnings before interest, taxes, depreciation, and amortization (EBITDA) breakeven by 2027, which seems like a realistic timeline if the R2 is successful.

Rivian is still a high-risk name, but it has the balance sheet, the partners, and the right vehicle strategy to grow into a profitable business.

Tesla is losing momentum

Tesla’s core auto business has been heading in the wrong direction. Deliveries dropped double digits in each of the past two quarters, while auto revenue slid 16% in Q2. Profitability and cash flow have also taken a hit. Adjusted EPS dropped 23% last quarter, while operating cash flow fell 30% and free cash flow collapsed to just $146 million.

Meanwhile, its high gross margin regulatory credit sales were cut by more than half during the quarter. Musk has already warned investors that things could get worse once the EV tax credit disappears later this year.

Rather than focusing on improving its ailing auto business, Musk has instead continued to try to sell investors on Tesla’s autonomous driving and robotics ambitions. The company has launched a small pilot robotaxi program in Austin, Texas, but the service is limited to a geofenced area and requires a Tesla employee as a safety driver. It’s also already drawn scrutiny from local officials after several safety incidents.

Tesla is promising a rapid rollout of robotaxis across half the U.S. by year-end pending regulatory approvals, but the technology does not appear ready. Its decision to eschew lidar technology and use a camera-only approach remains controversial. This design saves costs, but the technology has struggled in some complex driving conditions, leading to questions around the safety of its approach. By comparison, Alphabet’s Waymo robotaxi is far ahead, with years of experience operating paid, driverless rides in multiple cities.

Image source: Getty Images.

Which EV stock wins?

Both Tesla and Rivian stocks carry their fair share of risk. Rivian is still unprofitable and faces near-term headwinds from tariffs and the loss of EV tax credits. Tesla, however, has a weakening auto business, a valuation that assumes big success in robotaxis and robotics, and a CEO whose actions have hurt the brand with many consumers.

Between the two, Rivian looks like the better investment. The company is improving its cost structure, expanding its market with the R2 SUV, and has the support of well-financed partners to help fund its growth. Tesla’s stock, by contrast, is still priced as if its autonomous driving and robotics bets will pay off, even though it has yet to prove they can.

For investors willing to take on risk, Rivian is the better EV stock to own in my view.