stock

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

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

Image source: Getty Images.

Block’s two ecosystems continue to grow

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

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

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

PayPal has long been a leader in digital payments

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

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

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

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

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

The final verdict

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

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

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

Aug. 25 (UPI) — Chinese property giant China Evergrande was delisted from the Hong Kong stock exchange on Monday, 20 months after being placed into liquidation by a court in the semi-autonomous region of China and almost 15 years after it was the most oversubscribed IPO of 2009 with a $50 billion valuation.

Hong Kong Exchanges and Clearing said it canceled the listing effective Monday because an 18-month deadline for Evergrande to resume trading passed last month, with the company opting not to appeal the decision.

“The exchange advises shareholders of the company who have any queries about the implications of the delisting to obtain appropriate professional advice,” said HKEX.

Macrolens managing principal Brian McCarthy told CNBC he expected investors holding Evergrande shares and bonds to lose most of their money and that a surge in Chinese property stocks might just be the initial phase of a “speculative frenzy” in Chinese equities.

“There have been some attempts to attach [Evergrande’s] assets, but they’ve not really managed to liquidate anything for more than a few cents on the dollar,” said McCarthy.

He warned that the debacle put foreign investors who invest in China via Hong Kong on notice that they have “limited recourse to onshore assets if things went bad,” and predicted that shareholders and bondholders in most of the large Chinese property developers would end up with “goose eggs.”

Trading in Evergrande shares ceased in January 2024 after a judge issued a winding-up order after the developer repeatedly failed to come up with a viable plan to restructure liabilities of at least $325 billion.

Shares sold at 45 cents back in 2009 were worth 2 cents at the last quote early Monday.

Trading in the stock had been suspended several times since 2021, but it has always managed to resume within the maximum permitted gap of 18 months to avoid delisting.

“Once delisted, there is no coming back,” Dan Wang, China director at political risk consultancy Eurasia Group, told the BBC.

The firm sought bankruptcy protection in the United States in August 2023 and regulators suspended the stock the following month amid reports that founder and chairman Hui Ka Yan was under house arrest on the mainland.

Hui presided over a 15-year drive to build Evergrande into one of China’s largest businesses, but the growth was delivered through massive borrowing, much of it highly leveraged.

Much of Evergrande’s debt is owed to prospective homebuyers with down payments on apartments and houses that are half-built, or on which work has yet to start, as well as suppliers and subcontractors.

Hui was fined $6.5 million and received a life ban from participating in China’s capital market for claiming Evergrande’s revenue was $78 billion more than it actually was.

In summer 2023, after failing to issue financial results for two years, the group belatedly reported that it had lost $81.1 billion during the period as it battled to maintain payments to suppliers and lenders and complete projects across China.

The losses, $66.4 billion in 2021 and $14.7 billion in 2022, were blamed on a market slump that forced it to take haircuts on its developments and financial assets and higher borrowing costs.

The demise of the firm, which at its peak had more than 1,300 projects in 280 Chinese cities, is the most high-profile symbol of the crisis enveloping China’s property sector, which accounts for as much as 25% of GDP.

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

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

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

No terminal, no problem

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

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

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

Image source: Getty Images.

A huge global opportunity

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

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

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

Can AST SpaceMobile keep soaring?

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

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

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

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

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

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

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

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

Competition is coming for Tesla

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

Image source: Getty Images.

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

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

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

Data source: Tesla.

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

What it means for Tesla investors

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

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

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

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

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

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

Image source: Getty Images.

Terms of the partnership

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

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

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

How it helps Alphabet

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

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

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

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

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

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

GOOGL Total Return Level data by YCharts.

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

The Meta deal and Alphabet stock

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

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

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

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

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

Image source: Getty Images.

Understanding Lemonade’s business

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

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

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

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

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

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

What will happen to Lemonade over the next five years?

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

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

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

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

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

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.

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.

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.

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.

The low-altitude economy is on the verge of rocketing higher over the next few decades. Bank of America sees the global adoption of electric vehicle take-off and landing (eVTOL) aircraft to increase by 62% by 2030.

While Joby Aviation is one way to profit from this opportunity, it’s worth noting that Cathie Wood of Ark Invest has placed her bet on Archer Aviation (ACHR 2.93%) for the Ark Innovation ETF, which holds almost 18 million shares. There’s one reason that may explain why Wood is bullish, and it’s also why I hold shares — and that’s a steady flow of positive developments in the past year that position Archer to be a leader in the air taxi market.

The Midnight model eVTOL aircraft. Image source: Archer Aviation.

Why buy Archer Aviation stock

Over the past year, there have been a number of announcements that show the company progressing toward receiving the required certifications and launching commercial operations. This has had a significant impact on the stock price, which has doubled over the past year despite the company not generating significant revenue yet.

Archer has previously announced partnerships with United Airlines and Southwest Airlines to operate air taxi networks across major cities in the U.S. It also has financial backing from Stellantis and other investors as it works toward its goal of manufacturing 50 aircraft per year. In its second-quarter earnings report, Archer reported there were six Midnight aircraft in different production stages, with three in final assembly at its Georgia and Silicon Valley facilities.

In June, Archer, along with the Federal Aviation Administration and the U.S. Department of Transportation, announced an alliance with the United Kingdom, Australia, Canada, and New Zealand in streamlining the certification and commercial launch of eVTOL aircraft.

Finally, Archer Aviation was recently named the official air taxi service for the 2028 Olympic Games in Los Angeles, which will be valuable marketing in demonstrating its capabilities. Given these developments, Archer Aviation is a potential breakout growth stock to watch over the next year.

Investing in cybersecurity stocks makes sense in this digitally dependent world. And now, the importance of protection against cyberattacks is amplified further by the emergence of artificial intelligence (AI).

That’s why some forecasts predict the cybersecurity industry will grow from $194 billion in 2024 to $563 billion by 2032 with generative AI giving companies in the sector a boost. Veteran player Palo Alto Networks (PANW 1.38%) is already seeing AI serve as a tailwind to its business.

Even so, the company’s stock is well off its 52-week high of $210.39 reached at the end of July. Does this create an opportunity to scoop up shares at a discount? Let’s dive into Palo Alto Networks to see if the cybersecurity titan is a worthwhile investment.

Image source: Getty Images.

Palo Alto Networks’ strategic initiatives

Palo Alto’s share price dropped after the company announced on July 30 the impending acquisition of CyberArk for $25 billion. Its stock’s decline was understandable given this is the largest acquisition under Palo Alto Networks CEO Nikesh Arora since he took over the top spot in 2018.

CyberArk focuses on identity security, which ensures only authorized users have access to a company’s systems and data. Acquiring CyberArk was a smart move. Identity security is an area lacking in the Palo Alto Networks platform, and now that hole is filled.

The capability is important in the AI era. Artificial intelligence now executes tasks on behalf of a business, so cybersecurity software must be able to identify which AI are allowed and which might indicate an attack is taking place. CyberArk will enable Palo Alto Networks to do that task.

The acquisition also strengthens the company’s “platformization” strategy, a key component of its long-term business growth. Before Arora’s leadership, Palo Alto Networks sold disparate security products and was known particularly for its firewalls.

Now, the company is pursuing a platform play where its offerings are bought as a complete cybersecurity package. This does away with the need for customers to buy from various vendors, making Palo Alto Networks a one-stop solution.

Palo Alto Networks’ rising fortunes

The platformization approach is working. Palo Alto Networks reported strong 15% year-over-year revenue growth to $9.2 billion in its 2025 fiscal year, ended July 31.

Not only did revenue rise, the cybersecurity giant’s fiscal 2025 operating income grew to $1.2 billion from $683.9 million in the prior year. This demonstrates that Palo Alto Networks is managing its costs well as it grows revenue.

Another area of strength is the company’s balance sheet. It exited the fiscal fourth quarter with total assets of $23.6 billion compared to total liabilities of $15.8 billion. But it’s worth noting that $12.8 billion of those Q4 liabilities represented deferred revenue. This is up-front payments from customers that will be recognized as income once services are delivered.

In addition, the cybersecurity giant expects another year of excellent sales growth in fiscal 2026. Palo Alto Networks is forecasting around $10.5 billion in revenue for the new fiscal year, which would be a 14% increase over 2025’s $9.2 billion.

Making a decision on Palo Alto Networks stock

Despite a crowded field of competitors in the cybersecurity sector, Palo Alto Networks is making moves that strengthen its business, while its platformization strategy is paying off with sales growth. But before deciding to purchase shares, another factor to consider is share-price valuation.

To assess this, here’s a look at the price-to-sales (P/S) ratio for Palo Alto Networks in comparison to major competitors CrowdStrike and Zscaler. The metric measures how much investors are willing to pay for every dollar of revenue generated over the trailing 12 months and is useful for comparing companies that are not profitable, as is the case for CrowdStrike and Zscaler.

Data by YCharts.

The chart shows that Palo Alto Networks possesses the lowest P/S multiple across the trio; as of Aug. 19, it’s lower than it’s been over the past year. This indicates Palo Alto Networks stock is attractively valued.

Contributing to its many strengths, on Aug. 14, Palo Alto Networks announced that its cybersecurity systems are preparing to protect against attacks from quantum computers. While quantum machines are still in the developmental stages, they have the potential to easily slice through today’s digital protections. The announcement illustrates the company’s drive to stay ahead of emerging threats.

With strong sales, healthy financials, and a successful platform that continues to keep pace with an ever-changing tech landscape, Palo Alto Networks possesses the characteristics of a company worth investing in. Add to this a compelling share-price valuation, and now looks like a good time to buy its stock.

When most investors think about artificial intelligence (AI) opportunities, their attention naturally turns to companies in the technology sector. But if you’ve been following the story closely over the past couple of years, you’ll know that one of AI’s most critical challenges lies elsewhere: energy storage and power generation.

The surge in AI computing capacity is placing unprecedented strain on the U.S. power grid, pushing alternative solutions — particularly nuclear energy — to the forefront of the conversation.

One company gaining traction in the space is Oklo (OKLO 4.90%). Promising breakthroughs in next-generation nuclear microreactors, Oklo has quickly captured the attention of growth investors. The question now: could Oklo become the “next Nvidia” and define its industry for decades to come?

Nvidia’s early edge

When Nvidia first introduced the graphics processing unit (GPU) in the late 1990s, few understood the transformative potential of the technology. At the time, GPUs were largely embraced by video game players seeking better and faster graphics performance. But Nvidia’s visionary CEO, Jensen Huang, recognized something others didn’t — its parallel processing chips could address other latent needs and handle a broader range of computational challenges.

Fast-forward to today, and GPUs have evolved from a niche gaming product into the backbones of generative AI infrastructure — providing the specific type of processing muscle required for applications ranging from cybersecurity to autonomous vehicles to robotics and beyond.

The key takeaway here is that while Nvidia’s GPU business started with limited traction, it ultimately achieved true product-market fit — laying the foundation for an empire as the use cases for the chips multiplied and the technology became indispensable.

Image source: Getty Images.

Oklo looks promising, but…

Oklo has quickly captured investor attention thanks to its unique positioning at the intersection of energy and AI. One major catalyst for the company is OpenAI CEO Sam Altman, who previously served as chairman of Oklo’s Board. Altman’s name recognition and influence have undoubtedly elevated Oklo’s profile and helped fuel its narrative as a potential multibagger in the AI energy landscape.

Beyond star power, Oklo also benefits from a growing network of high-profile partnerships. Collaborations with the Department of Energy (DOE), the U.S. military, and private sector infrastructure players such as Vertiv and Liberty Energy underscore the company’s credibility. These alliances not only offer some validation to Oklo’s technology, but also highlight the strategic importance of its microreactors as potential sources for clean and efficient energy.

…comparing it to Nvidia is a stretch

While Oklo has drawn the attention of government agencies and AI sector power players, the company has yet to deliver a tangible product. Unlike Nvidia’s GPU business in the late 1990s, which was already mass-producing chips and gaining early adopters, Oklo has not yet built an operational reactor. No power is being generated at scale, and it has no billable customers in place. In other words, Oklo’s value proposition to the AI industry is entirely speculative — a critical distinction when benchmarked against Nvidia’s early position.

OKLO data by YCharts.

The stock chart above illustrates this disconnect. Oklo’s shares have surged by nearly 800% over the past year, pushing its market cap to $9.7 billion — a figure that equals nearly 26 times Nvidia’s combined 1999 and 2000 revenue. That type of premium is difficult to justify for a company with no revenue, a hefty capital expenditure budget, and a path forward that will hinge largely on winning regulatory approvals.

Oklo stock remains a speculative gamble, and its narrative increasingly resembles what one would expect from a meme stock rather than a sustainable growth story. Its rally over the past year has been largely fueled by hype-driven momentum and enthusiasm from unsuspecting retail investors.

In my view, Oklo is far from the next Nvidia. If anything, the stock already appears to have priced in most (if not all) of its potential upside. Chasing the stock’s current momentum could leave investors holding the bag when reality kicks in.

Twilio (TWLO 5.25%) is a cloud communications company that’s known for its application programming interfaces (APIs) that help its clients build software tools to remain in touch with their customers through various channels such as voice, text, email, video, and instant messaging. Its growth has accelerated in recent quarters thanks to the integration of artificial intelligence (AI)-focused tools into its communications platforms.

However, Twilio stock has witnessed a lot of volatility on the market this year. It has lost just over 4% of its value in 2025 as of this writing, driven by the company’s mixed quarterly performances. It fell like a rock in February this year, and a similar story unfolded following the release of its second-quarter results on Aug. 7.

Shares of Twilio sank over 19% after its latest report, thanks to disappointing guidance. However, Twilio’s 12-month median price target of $131, as per 30 analysts covering the stock, points toward a 27% jump from current levels. Let’s see why analysts are upbeat about Twilio’s direction in the coming year.

Image source: Getty Images.

Twilio’s growth is accelerating thanks to AI

Twilio reported a 13% year-over-year increase in revenue in Q2. Its earnings grew at a faster pace of 37% to $1.19 per share. It is worth noting that Twilio’s revenue growth has accelerated in the past year.

TWLO Revenue (Quarterly) data by YCharts.

The company’s improving growth profile can be attributed to the stronger growth in its customer base in recent quarters, as well as a jump in spending by existing customers on its solutions. This is evident in the following table.

Data source: Twilio quarterly reports.

The active customer accounts refer to customers from whom Twilio generated at least $5 in revenue in the final month of the quarter. Meanwhile, the dollar-based net expansion rate compares the spending by active customer accounts in a quarter to the spending by those same customers in the year-ago period.

The company is witnessing a nice uptick on both fronts, and this explains why its top- and bottom-line growth have started getting better in recent quarters. The adoption of Twilio’s AI tools is playing a central role in giving its growth a shot in the arm. For instance, the company is witnessing a “surge in voice AI start-ups who are building on Twilio.”

Management points out that it saw an 86% year-over-year increase in the number of customer accounts using its conversational intelligence messaging platform last quarter. Twilio’s conversational intelligence solutions allow its clients to extract and analyze insights from voice calls and chats, convert voice calls into transcripts in real time, summarize conversations, and measure customer sentiment.

Companies can integrate this tool into their communications software with Twilio’s APIs so they can use the data from conversations for improving sales and reducing customer churn. So, it is easy to see why Twilio’s AI communications tools are helping it attract more customers, while also allowing it to win a bigger share of existing customers’ wallets.

Investors need to look past the near-term guidance

Twilio’s Q3 revenue guidance calls for 10% to 11% growth from the year-ago period. That would be a slight deceleration from the growth it reported in the previous quarter. Even the earnings guidance range of $1.01 per share to $1.06 per share doesn’t point toward a significant improvement over the year-ago period’s reading of $1.02 per share.

However, don’t be surprised to see Twilio exceeding its expectations and reporting stronger growth. That’s because the adoption of AI in the cloud-based contact center market is expected to generate a revenue opportunity of $10 billion in 2032, compared to less than $2 billion last year. As a result, Twilio can keep attracting new customers and cross-sell its AI tools to existing ones.

This should lead to an improvement in its bottom line in the future, and this is what analysts are expecting.

TWLO EPS Estimates for Current Fiscal Year data by YCharts.

An improvement in Twilio’s earnings growth could lead the market to reward it with a higher multiple. The stock is trading at 24 times forward earnings, which is a discount to the tech-focused Nasdaq-100 index’s forward earnings multiple of 30 (using the index as a proxy for tech stocks). If Twilio can indeed hit $6.20 per share in earnings in 2027 and trades in line with the index’s forward earnings multiple at that time, its stock price could jump to $186.

That would be an 80% jump from current levels. So, Twilio seems to be in a position to not just hit Wall Street’s price target in the coming year, but deliver stronger gains in the long run. That’s why investors should consider buying this AI stock on the dip, since its weakness shouldn’t last for long.

Intel (INTC 5.64%) stock is leaping higher in Friday’s trading thanks to a pair of bullish catalysts. The semiconductor company’s share price gained 5.5% in a day of trading that saw the S&P 500 jump 1.5% and the Nasdaq Composite surge 1.8%.

Intel’s valuation climbed today thanks to a speech from Federal Reserve chair Jerome Powell that increased hopes among investors for an interest rate cut at the central bank’s meeting next month. The stock also got a boost from a report suggesting that the Trump administration was on the verge of announcing that it was on track to acquire a 10% stake in the company.

Image source: Getty Images.

Interest rate news boosted Intel stock today

Powell gave a speech this morning that has restored market confidence in a September interest rate cut and the potential for another rate cut later in the year. The Fed has kept rates relatively high in order to combat inflation, but investors have been hoping that the central bank will deliver cuts and create a stronger environment for stocks and other assets.

While Powell said that inflation continued to present challenges, he indicated that weakness in the U.S. economy was looking like the bigger risk factor. His comments seemed to indicate that the Fed is leaning toward cutting rates next month, and they helped power gains for Intel and many other tech stocks today.

Intel also rose thanks to major U.S. investment news

Bloomberg published a report today stating that President Donald Trump was on track to announce that the U.S. government would be taking a nearly 10% equity position in Intel. The official announcement wound up arriving after the market closed today, but Trump did confirm that he had met with CEO Lip-bu Tan and that the U.S. will be taking a 10% stake in Intel.

The development will allow Intel to receive funding that had been apportioned to it through the CHIPS Act. It also opens the door for additional government support as artificial intelligence (AI) chip designs and chip fabrication technologies become increasingly important to the economy and national security.

On a very good Friday for the stock market, Biohaven‘s (BHVN 6.33%) performance was exceptional. The clinical-stage biotech‘s share price inflated by over 6% that trading session thanks to regulatory news it delivered in the morning. Even the surging S&P 500 index couldn’t come close to that kind of increase, with its 1.5% gain on the day.

Regulatory progress

Biohaven revealed in a filing with the Securities and Exchange Commission (SEC) that it has been updated on the progress of its New Drug Application (NDA) for troriluzole. The company said that the Food and Drug Administration (FDA) informed it that an advisory committee meeting to discuss the submission at the regulator was no longer necessary.

Image source: Getty Images.

Troriluzole is a drug that targets spinocerebellar ataxia, a cluster of inherited and progressive neurological disorders that affect the body’s movement. The development and regulatory application process for the drug has been halting, with the FDA initially refusing to accept the company’s filing. Biohaven ran a new late-stage clinical trial and is using its data for the current NDA.

Although the cancellation of the advisory meeting implies the regulator has, in effect, already reached a decision, it might not necessarily be one favorable to the company. Investors are best advised to wait until the actual decision is rendered to make a decision on whether or not to buy this stock.

Good chance for success, apparently

Having said that, according to research from RBC Capital Markets analyst Leonid Timashev cited by Investor’s Business Daily, around two-thirds of applications where an advisory committee meeting is cancelled ultimately won approval (from 2019 until the present). Given that, the market’s very bullish reaction to the news is understandable.

BigBear.ai Holdings (BBAI -0.09%) has been a volatile stock to hold over the past year, with its price ranging between a low of $1.26 and a high of $10.36. Recently, the company reported earnings, and it has once again disappointed investors, sending BigBear’s stock back into another tailspin.

For all the hype and excitement surrounding the company’s artificial intelligence (AI)-powered business software, BigBear has failed to deliver strong results time and time again. In its most recent quarter, the company not only badly missed expectations, but it also slashed its guidance.

Is the stock in trouble, and could this be the start of a much bigger and prolonged sell-off for the tech company, or could BigBear make for a good contrarian buy today?

Image source: Getty Images.

Big miss highlights the company’s dependency on government contracts

On Aug. 11, BigBear reported its quarterly numbers for the period ending June 30. Revenue of $32.5 million declined by 18% year over year, and the company’s operating loss grew from $16.7 million to $90.3 million. With numbers like that, it’s not much of a surprise that the stock fell after the release of the report. Wall Street analysts were expecting revenue to come in around $40.6 million.

The reason for the big drop in revenue was a result of “disruptions” in the federal contracts the company has with the government, particularly with programs supporting the U.S. Army. The government’s “efficiency efforts” have impacted not only this past quarter’s results but also resulted in BigBear reducing its guidance for the full year. The company now anticipates its full-year revenue will be within a range of $125 million to $140 million, versus its previous guidance of $160 million to $180 million.

For investors, the concern is that government spending can have a significant impact on BigBear’s financials and dictate its growth. The company needs to diversify its customer base; otherwise, government cutbacks could continue to weigh down its top line in the future.

Lack of revenue growth isn’t BigBear’s only problem

It’s bad news for a growth stock to show no growth, and for its sales to actually decline on a year-over-year basis. But a more troubling issue I see is that BigBear’s gross profit margins are low for a software company. It reported a gross margin of $8.1 million last quarter, which was just 25% of its top line.

Many investors see BigBear as potentially being the next Palantir Technologies. But consider that Palantir’s gross margins are far stronger — about 80% of revenue, which enables the data analytics company to comfortably post a profit.

If BigBear isn’t generating enough gross profit, that will make it incredibly difficult for the company to get anywhere near breakeven. And it may also suggest that it is pricing its software solutions too low, perhaps for the sake of growing revenue. But without strong margins, revenue growth alone isn’t going to make BigBear a strong company to invest in.

BigBear has a lot of work to do before it becomes a good stock to own

For BigBear to be a good business to invest in, it needs to diversify its operations so that it isn’t so dependent on government spending. It also needs to improve its gross margins. Without those two things, it’s going to be extremely difficult for the company to consistently grow its top line and have any hope of becoming profitable in the foreseeable future.

Until that happens, I would suggest staying away from the stock as BigBear has been a highly risky and volatile investment to hang on to thus far, and I don’t think that’s going to change anytime soon.

Shares of Opendoor Technologies (OPEN 27.50%) are flying higher on Friday, up 24.8% as of 1:15 p.m. ET. The jump comes as the S&P 500 gained 1.4% and the Nasdaq Composite gained 1.7%.

Federal Reserve Chairman Jerome Powell gave a speech this morning that signaled interest rate cuts could be coming. The news sent stocks across the market higher, but the effect was especially large for many riskier stocks like Opendoor’s.

Why Fed rate cuts matter for Opendoor stock

Speaking at the Fed’s Jackson Hole symposium, Powell highlighted that the economic picture is mixed with a lot of moving parts complicating the Fed’s decision. The Fed chief acknowledged that the economy is showing resilience, but downside risks are increasing. He appeared particularly concerned about tariffs potentially reigniting inflation. Still, he indicated cuts are coming, though he didn’t explicitly say so.

Opendoor stock flew higher on the news as more speculative investments like Opendoor tend to do better in low interest rate environments. The effect was even larger for Opendoor, however, because the company’s business model is heavily affected by interest rates. Rate cuts could help boost its bottom line.

Image source: Getty Images.

This meme rally could end for Opendoor stock

While the digital real estate disruptor operates in a massive market with genuine innovation potential, its competitive moat remains questionable. The meme-stock rally has been fueled by the idea that AI can unlock the company’s true potential. While the idea is interesting, there’s no guarantee it will work.

In the meantime, the company is operating in the red, relies heavily on debt, and the real estate market does not look particularly promising at the moment. I would avoid the stock.

BigBear.ai (BBAI 1.92%) stock was in roaring form on the stock market for much of the past year, rising by a whopping 337% as of this writing, despite even wilder swings in its share price. The past month, however, has been one that the company’s investors may wish they could forget — the stock lost 31% of its value during the period.

Its second-quarter results, which it released on Aug. 11, made matters worse. BigBear.ai didn’t just miss Wall Street’s expectations — it also trimmed its 2025 guidance, and the stock was hammered. Investors, however, should remember that BigBear.ai is operating in the artificial intelligence (AI) software market, which is on course to grow rapidly in the coming years.

So, should savvy investors treat this stock’s recent drop as a buying opportunity in anticipation of healthy gains over the next three years? 

Image source: Getty Images.

BigBear.ai’s end market is growing at an incredible pace

BigBear.ai’s AI-powered solutions enable its clients to analyze their data so that they can improve their decision-making ability, which can ultimately lead to improved operational efficiency and productivity. The company’s AI solutions are already being deployed in such varied areas as cybersecurity, digital identity management, computer vision, and predictive intelligence.

BigBear.ai points out that these AI tools are being used in industries such as border security, defense, travel and trade, supply chain, healthcare, and academics. The good part is that demand for the type of AI software platform that BigBear.ai provides is growing at a tremendous pace. Market research firm IDC expects this market to generate $153 billion in annual revenue in 2028, up from just $28 billion in 2023.

The bad news, however, is that BigBear.ai isn’t doing enough to make the most of this lucrative opportunity. Its revenue barely increased last year, and its updated 2025 guidance for revenue in the $125 million to $140 million range suggests that its top line will drop by between 12% and 21%. Meanwhile, competitor Palantir Technologies (PLTR 2.99%) has been making significant strides in the AI software platform market.

In the first half of 2025, Palantir’s revenue jumped by 44%. Its backlog grew at a faster pace than BigBear.ai’s. Palantir also ended the second quarter with a 65% spike in its remaining deal value (the total value of its unfulfilled contracts) to $7.1 billion. Meanwhile, BigBear.ai’s $380 million backlog at the end of Q2 represented a 43% increase from the year-ago period.

In short, Palantir is growing at a much faster pace than BigBear.ai, even though it is the bigger company. A major reason why that’s the case is that Palantir is successfully targeting commercial customers. The company started offering its Artificial Intelligence Platform (AIP) to commercial customers in April 2023, and it has been reaping the rewards ever since.

Palantir’s commercial revenue increased by an impressive 47% year over year in the second quarter, driven by an almost identical increase in the commercial customer count. BigBear.ai, on the other hand, relies on federal government contracts for the majority of its revenue. The unpredictability associated with government spending is the reason why BigBear.ai’s latest quarterly performance wasn’t up to the mark.

Lower-than-expected revenues from its Army contracts led to an 18% year-over-year revenue decline in Q2 and also forced management to lower its guidance.

It’s clear that BigBear.ai needs to take a leaf out of Palantir’s playbook and more aggressively pursue commercial opportunities. CEO Kevin McAleenan realizes this.  On the company’s latest conference call, he said:

Coming into the role as CEO earlier this year, it was clear to me that our pipeline was narrow and relied on a few large contracts. We have taken steps this year to deepen and broaden that pipeline with additional customers, more prime contract targets, larger opportunities, and expansion into new markets, including internationally.

However, McAleenan added that these changes will take time to materialize.

The next three years could be difficult for this AI software specialist

Analysts significantly reduced their 2025 revenue expectations for BigBear.ai following its latest quarterly report. Their consensus revenue estimate for 2026 has also dipped significantly.

BBAI Revenue Estimates for Current Fiscal Year data by YCharts.

The company was previously expected to deliver healthy revenue growth next year. Though it is still expected to produce a double-digit percentage jump in its top line, the forecast for 2027 points toward another slow year. As such, BigBear.ai stock may remain under pressure. However, investors would do well to keep this stock on their watch lists.

That’s because BigBear.ai’s strategy of widening its customer base and accessing new markets could pay off, allowing it to potentially outpace Wall Street’s expectations over the next three years. The stock is currently trading at 10 times sales, and it may become cheaper following its recent results. So if there are signs of a turnaround in BigBear.ai’s business, savvy investors could consider buying this AI stock at a cheap valuation before the company steps on the gas.