Latest news with #JakeLerch
Globe and Mail
10 hours ago
- Business
- Globe and Mail
3 Best Tech Stocks for the Second Half of 2025
We're nearly halfway through 2025, and what a ride it's been for the stock market. As of this writing, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Index are up 2%, up 1%, and down 1%, respectively, year to date. So, as attention turns to the second half of 2025, three contributing analysts have selected their top buys within the technology sector: Reddit (NYSE: RDDT), Advanced Micro Devices (NASDAQ: AMD), and Meta Platforms (NASDAQ: META). Here's why. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Long-term growth investors may want to capitalize on Reddit's recent volatility Jake Lerch (Reddit): 2025 has been an up-and-down year for Reddit stock. As of this writing, it's down 13% year to date. However, the stock has been extremely volatile throughout the year. It's been up as much as 37% and down by almost 46%. So, obviously, Reddit isn't a stock for every investor or investment portfolio. That said, growth-oriented investors willing to hold for years might want to take the stock's recent volatility as an opportunity to accumulate shares. Reddit is a social media stock. It boasts more than 108 million daily average users and is growing fast. As of its most recent quarterly report (for the three months ended on March 31), the company's revenue growth stood at 61%. The company makes money through selling ad space, like its much larger social media rival, Meta Platforms. While Meta's ad ecosystem has existed for more than a decade and now draws in about a half-billion dollars per day, Reddit's ad ecosystem remains in its infancy. This creates a possibility for investors. Meta has already proven that the social media advertising model works -- and works very well. Meta has ridden that model to a staggering market capitalization of $1.7 trillion. Reddit, on the other hand, has a market cap of only $26 billion. In a move that mirrors Meta, Reddit recently announced plans to integrate artificial intelligence (AI)-powered ad tools into its network. This strategy could help marketers increase return on investment (ROI) by improving ad targeting and content. With its large, increasing user base and blistering revenue growth, there's every reason to think Reddit's long-term prospects remain bright -- and its stock price will rise. Product releases could draw buyers to this rising AI chip stock Will Healy (Advanced Micro Devices): On the surface, Advanced Micro Devices might look more like a second- quarter than a second-half stock. Since reaching an intra-day low of $76.48 per share on April 8, the stock has risen by approximately 65% over the last six weeks. However, that increase could be just the beginning of what is gearing up to be a second-half comeback. On June 12, AMD released its development pipeline for its AI accelerators through 2027. Investor interest coalesced around its MI400 GPU, which it plans to release sometime in 2026. The MI400 should significantly improve upon the recently released MI350, offering double the compute power, 50% more memory capacity, and 2.5 times the bandwidth. Such advancements are on track to close most of its competitive gap with Nvidia, though Nvidia will almost certainly counter with its own improvements. Additionally, AMD will integrate the MI400 with its Helios rack system. This rack system will combine the MI400 with AMD's upcoming Venice CPU and Pensando Vulcano NICs, providing AMD with a unified AI rack-scale infrastructure for modeling and inference. This is occurring as AMD has begun to benefit from accelerating revenue growth. In the first quarter of 2025, its data center and client (PC) segments grew revenue by 57% and 68%, respectively, while revenue for the gaming and embedded segments declined at a slower rate. Thus, the overall annual revenue growth of 36% in Q1 is significantly faster than the 14% yearly increase in 2024. Moreover, while AMD trades at a higher P/E ratio than Nvidia, improving profitability places its forward P/E ratio at 32, slightly below that of its larger rival. Furthermore, AMD's 7.5 price-to-sales (P/S) ratio is far below Nvidia's sales multiple of 24, likely making the stock more attractive to value-oriented investors. Admittedly, AMD continues to play catch-up in the AI accelerator market. Nonetheless, with the chip company closing the gap, that low P/S ratio could easily persuade investors to bid AMD stock higher as they anticipate the MI400's release. Meta's advertising model just received another boost. Justin Pope (Meta Platforms): Oftentimes, winners keep winning. Shares of social media giant Meta Platforms have primarily moved in an upward direction since 2023, but I like the stock's chances to continue its run over the second half of this year. Most investors already know that Meta Platforms is a beast in digital advertising. It makes virtually all of its revenue and profits from advertising to the 3.43 billion people who use its family of apps each day. What investors may not realize is that for years, Facebook and Instagram have carried the company's advertising water. Meta generated approximately $160.6 billion of its $164.5 billion in total revenue last year from ads placed in Facebook, Messenger, Instagram, and third-party mobile apps. Missing from that list is WhatsApp, the wildly popular communications app with over 3 billion monthly active users. But that's changing. Meta recently announced that it will finally place ads in WhatsApp statuses and channel pages. That will open up an entirely new revenue stream for the company, which, given the massive ad revenue Facebook and Instagram produce, could drive significant growth as monetization ramps up over time. Analysts anticipate that Meta's earnings will grow at an average annual rate of 18% over the next three to five years. I wouldn't be surprised if WhatsApp's incremental ad revenue helps the company meet or exceed those estimates. Meta's price-to-earnings ratio has risen to 27, but, frankly, that's still reasonable for the growth you're likely to see over the coming years. Meta waited over a decade after acquiring WhatsApp to make this move, demonstrating just how well its CEO, Mark Zuckerberg, can play the long game. Investors would probably be wise to consider partnering with Meta as buy-and-hold investors at these prices. Should you invest $1,000 in Meta Platforms right now? Before you buy stock in Meta Platforms, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $881,731!* Now, it's worth noting Stock Advisor 's total average return is994% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Nvidia and Reddit and has the following options: long July 2025 $150 calls on Advanced Micro Devices. Justin Pope has no position in any of the stocks mentioned. Will Healy has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
Yahoo
09-06-2025
- Business
- Yahoo
Is Palantir Still a Buy After Its Run-Up? 3 Analysts From The Motley Fool Weigh In.
Palantir's optimism and valuation are reminiscent of a bubble from years past. High valuation metrics don't tell the full story of every stock. An analysis of the analytics stock makes owning Palantir difficult to justify. 10 stocks we like better than Palantir Technologies › One of the fastest-growing stocks in artificial intelligence (AI) over the last year is Palantir Technologies (NASDAQ: PLTR). Its Artificial Intelligence Platform (AIP) brought eye-popping productivity gains to its customers. Investors took notice, as the stock is up by 420% over the last year. Unfortunately for investors who have recently taken an interest, its forward P/E ratio is 205, and it sells for 96 times sales. Knowing that, three analysts from The Motley Fool have weighed in to determine whether its stock is still worth buying at these levels. Justin Pope: Separating noise from signal is arguably the most challenging aspect of investing. For Palantir, the noise is a red-hot stock price. Shares of Palantir have risen a mind-melting 1,770% since 2023. In other words, buying the stock up to this point has looked like a genius move. Anyone seeing this, especially on social media, where people aren't always humble, might feel tempted to jump into the stock. But here is the signal. The stock is rising faster than Palantir's underlying business has grown. Don't get me wrong, I think Palantir is an excellent AI stock, and the company is executing at a high level, particularly since launching AIP two years ago. It can make a stock appear invincible when prices only go up. However, investors have seen this movie before. Cisco Systems ran to wildly excessive valuations during the infamous dot-com bubble in the late 1990s. It lost most of its value when the bubble burst, and still hasn't revisited its all-time high, a whopping 25 years later. That doesn't mean that Palantir will suffer the same fate, but check this out. Cisco's P/E ratio peaked at approximately 234, and its price-to-sales (P/S) ratio peaked at around 39. Palantir is even more expensive today than Cisco at its peak. At the very least, it's hard to imagine much more rational upside in Palantir from these levels. Even worse, any market downturn or misfire in Palantir's business could pop that valuation bubble. Investors should tread very carefully around Palantir stock these days. Jake Lerch: Here's a sentiment that I often hear: "I love the stock, but it's too late to buy it now." And while there's nothing wrong with this viewpoint in theory, I've seen it disproven too many times in practice to grant it much weight. Take Amazon, for example. For years, countless analysts pointed out -- for good reason -- that Amazon's valuation was sky-high. From 1997 through 2000, Amazon's average P/S ratio was around 16. Moreover, the company had no profits -- and therefore no P/E ratio -- until 2003. Once it was making money, Amazon's average P/E ratio over its first five years of profitability was an eye-popping 88. Yet, investors who bought Amazon -- and held until today -- would be very happy with the results. In fact, $10,000 invested in the stock in 2008 would be worth about $800,000 today. This is all to point out that valuation isn't everything. Yes, Palantir is an expensive stock by just about any measure. Its current P/S and P/E ratios are significantly higher than the historical averages I cited for Amazon. However, that's because Palantir is poised to deliver enormous growth over the next decade or more. The company offers a unique value proposition that appeals to almost every organization. It can deliver efficiency gains for government agencies; it can cut costs for commercial clients. It can even help military and intelligence agencies win wars and prevent terrorist attacks. Simply put, there's very little this company can't do. Lastly, the nature of AI and data analysis means that Palantir is positioned to benefit from significant network effects and economies of scale as its AI systems improve and the company's overall client list grows. On top of that, its revenue is already growing at a year-over-year rate of 39%, and profits are increasing, as is free cash flow. That's what gives me confidence to believe it's not too late to buy Palantir stock. Will Healy: When it comes to AI living up to its potential, perhaps no stock outshines Palantir. The company began in 2003 and utilizes AI and machine learning as a national security-focused tool. However, it was only when Palantir began to benefit from AIP's massive productivity gains that its popularity took off. Anduril Industries had a 200-fold efficiency gain in its ability to respond to supply shortages. A global insurer reduced an underwriting workflow from two weeks to three hours. With results like that, it is little wonder its commercial customer count is up fivefold over the past three years. Such gains undoubtedly played a role in the aforementioned stock price growth, but regrettably for Palantir bulls, the increases likely do not justify the software-as-a-service (SaaS) stock's valuation, and here's why. In Q1, revenue of $884 million rose 39% compared to year-ago levels. With that growth, its net income of $214 million surged 103% higher over the same period. Unfortunately, triple-digit growth is not sustainable for even the best of companies, and the current valuation likely prices it for perfection. That "perfection" is likely not in the cards for Palantir. Analysts forecast revenue growth will slow to 36% for 2025 before falling to 29% in 2026. That is likely to do little to make the 96 P/S ratio more attractive, particularly when the larger and faster-growing Nvidia sells for 24 times sales. Indeed, Palantir is likely to play a key role in the AI field for years to come. Nonetheless, valuation matters at some point, and investors could find themselves stuck in a losing stock for years to come if the sentiment around the stock starts to turn negative. Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Amazon and Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Cisco Systems, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy. Is Palantir Still a Buy After Its Run-Up? 3 Analysts From The Motley Fool Weigh In. was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
3 Tech Stocks Destined to Drive Wealth Now and for Years to Come
Amazon's advertising business alone generated over $56 billion in revenue last year. The current success of AI is not possible without Taiwan Semiconductor. The market is overly pessimistic on Alphabet (Google). These 10 stocks could mint the next wave of millionaires › Investors can often simplify their investment choices by buying stock in established, wealth-building companies. Such stocks tend to offer investors more safety, and this approach is especially beneficial when a stock has not approached the end of its high-growth years. Fortunately, the market offers numerous stocks that fit this description, and many of them have achieved their growth through success in artificial intelligence (AI). With that, three analysts from The Motley Fool have recommended stocks that fit such a description. These large-cap stocks have not only stayed at the top of industries they helped transform but have also focused on plans that can keep them on a growth trajectory for years to come. Jake Lerch (Amazon): My choice is Amazon (NASDAQ: AMZN). When I think about which stocks have the potential to drive wealth over the long term, I look for companies with multiple pathways to success. In other words, diversification is key. Amazon, with its multiple business segments, is a perfect candidate. Obviously, the company is most well-known for its sprawling e-commerce empire, but there's far more to Amazon than just online sales. The Amazon Web Services (AWS) unit is the world's largest cloud services provider. That segment now generates over $100 billion in revenue annually and is poised to grow even larger as AI drives further data center spending by organizations around the globe. Moreover, Amazon also has a lucrative advertising business that generated over $56 billion in annual revenue in 2024. That's nothing to sneeze at, and it makes Amazon one of the largest players in the rapidly growing field of digital advertising. Finally, some areas currently generate comparatively little revenue but have big potential going forward. Here, I'm thinking about Amazon's robotics and AI businesses. The company already utilizes nearly 1 million robots supporting its warehouse and logistics operations. As the company scales up its use of robots, Amazon should realize increased profits as its margins expand. What's more, the company is surely learning lessons from its vast fleet of robots, which could make Amazon a leader in AI-powered robotics. In the future, Amazon could parlay this expertise into another lucrative business segment, serving organizations that lack their own fleet of AI robotics by loaning or selling robots trained to perform any variety of tasks. To sum up, Amazon's stable of diverse business segments is one of its greatest assets. Investors looking for a long-term buy-and-hold candidate shouldn't overlook Amazon stock. Will Healy (Taiwan Semiconductor): When it comes to stocks driving the AI revolution, some believe the most critical of these stocks is Taiwan Semiconductor (NYSE: TSM), or TSMC. The Taiwan-based semiconductor giant jumped to a technical lead in the last decade as more chip design companies turned to outside fabs. Grand View Research forecasts a compound annual growth rate (CAGR) of 8% for the semiconductor industry through 2030. That includes a 29% CAGR in the AI chip market, a benefit likely to accrue to TSMC. With that, it has become a favored fab for companies such as Apple, Nvidia, and Qualcomm. So advanced is its technology that Intel, which manufactures most of its own chips, had to turn to TSMC for its most advanced manufacturing. Unsurprisingly, its market share in the foundry business has risen to 67% as of the end of 2024. Additionally, it is not resting on its laurels. The company plans to spend approximately $40 billion in capital expenditures (capex) in 2025 as it seeks to add capacity to meet the insatiable demand for advanced chips. This includes plans to build additional fabs in Arizona, diversifying its manufacturing away from its politically contentious home base in Taiwan. Due to the heavy chip demand, TSMC generated almost $26 billion in revenue in the first quarter of 2025, a 42% yearly increase. That led to comprehensive income of nearly $12 billion in Q1, rising 47% over the same period as its operating expenses grew more slowly than revenue. Furthermore, TSMC's rapid growth appears all the more appealing as its stock trades at a 25 price-to-earnings (P/E) ratio. While geopolitical tension may have pressured the stock, it is arguably at a low valuation, considering TSMC's rapid revenue growth. Such conditions should serve investors well, especially as advanced chip production charges ahead. Justin Pope (Alphabet): Technology giant Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), Google's parent company, seems like a no-brainer to buy and hold for the long term. ChatGPT is garnering much attention, as some fear it will make Google's lucrative search engine obsolete with its ability to gather, summarize, and present information to queries. Despite ChatGPT racking up 5.1 billion web and mobile visits last month alone, Alphabet reported 10% year-over-year growth in Google Search ad revenue in Q1 2025. It's always wise to monitor potential threats, but Google Search is still doing just fine. Investors focusing too much on Google Search risk missing all the other great things happening at Alphabet: The company released Gemini 2.5, its latest AI model. There are over 1.5 billion monthly users of AI overviews in search results. Alphabet surpassed 270 million paid subscriptions (e.g., YouTube, Google One). Google Cloud's revenue grew by 28% and operating income by over 140% in Q1 2025. Waymo is performing over 250,000 weekly autonomous rides, up fivefold compared to a year ago. Ad revenue from Search has long been Alphabet's cash cow, but over time, other aspects of the company could offset any deterioration due to AI competitors, and then some. Analysts estimate Alphabet will grow its earnings by an average of 14.9% annually over the long term, down from over 17% a year ago. In other words, lower expectations mean the market believes growth will slow. But Alphabet's current share price values the stock at a P/E ratio of under 19, a bargain for a global technology leader, even at this slower growth rate. It seems the market has grown overly pessimistic toward Alphabet at this point. That could be a fantastic opportunity that pays off for long-term investors over the coming years. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $351,127!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,106!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $642,582!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of May 12, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Alphabet, Amazon, and Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has positions in Intel and Qualcomm. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy. 3 Tech Stocks Destined to Drive Wealth Now and for Years to Come was originally published by The Motley Fool
Globe and Mail
18-05-2025
- Business
- Globe and Mail
3 Tech Stocks Destined to Drive Wealth Now and for Years to Come
Investors can often simplify their investment choices by buying stock in established, wealth-building companies. Such stocks tend to offer investors more safety, and this approach is especially beneficial when a stock has not approached the end of its high-growth years. Fortunately, the market offers numerous stocks that fit this description, and many of them have achieved their growth through success in artificial intelligence (AI). With that, three analysts from The Motley Fool have recommended stocks that fit such a description. These large-cap stocks have not only stayed at the top of industries they helped transform but have also focused on plans that can keep them on a growth trajectory for years to come. Amazon is much more than just an e-commerce company Jake Lerch (Amazon): My choice is Amazon (NASDAQ: AMZN). When I think about which stocks have the potential to drive wealth over the long term, I look for companies with multiple pathways to success. In other words, diversification is key. Amazon, with its multiple business segments, is a perfect candidate. Obviously, the company is most well-known for its sprawling e-commerce empire, but there's far more to Amazon than just online sales. The Amazon Web Services (AWS) unit is the world's largest cloud services provider. That segment now generates over $100 billion in revenue annually and is poised to grow even larger as AI drives further data center spending by organizations around the globe. Moreover, Amazon also has a lucrative advertising business that generated over $56 billion in annual revenue in 2024. That's nothing to sneeze at, and it makes Amazon one of the largest players in the rapidly growing field of digital advertising. Finally, some areas currently generate comparatively little revenue but have big potential going forward. Here, I'm thinking about Amazon's robotics and AI businesses. The company already utilizes nearly 1 million robots supporting its warehouse and logistics operations. As the company scales up its use of robots, Amazon should realize increased profits as its margins expand. What's more, the company is surely learning lessons from its vast fleet of robots, which could make Amazon a leader in AI-powered robotics. In the future, Amazon could parlay this expertise into another lucrative business segment, serving organizations that lack their own fleet of AI robotics by loaning or selling robots trained to perform any variety of tasks. To sum up, Amazon's stable of diverse business segments is one of its greatest assets. Investors looking for a long-term buy-and-hold candidate shouldn't overlook Amazon stock. This chipmaker keeps AI on the cutting edge Will Healy (Taiwan Semiconductor): When it comes to stocks driving the AI revolution, some believe the most critical of these stocks is Taiwan Semiconductor (NYSE: TSM), or TSMC. The Taiwan-based semiconductor giant jumped to a technical lead in the last decade as more chip design companies turned to outside fabs. Grand View Research forecasts a compound annual growth rate (CAGR) of 8% for the semiconductor industry through 2030. That includes a 29% CAGR in the AI chip market, a benefit likely to accrue to TSMC. With that, it has become a favored fab for companies such as Apple, Nvidia, and Qualcomm. So advanced is its technology that Intel, which manufactures most of its own chips, had to turn to TSMC for its most advanced manufacturing. Unsurprisingly, its market share in the foundry business has risen to 67% as of the end of 2024. Additionally, it is not resting on its laurels. The company plans to spend approximately $40 billion in capital expenditures (capex) in 2025 as it seeks to add capacity to meet the insatiable demand for advanced chips. This includes plans to build additional fabs in Arizona, diversifying its manufacturing away from its politically contentious home base in Taiwan. Due to the heavy chip demand, TSMC generated almost $26 billion in revenue in the first quarter of 2025, a 42% yearly increase. That led to comprehensive income of nearly $12 billion in Q1, rising 47% over the same period as its operating expenses grew more slowly than revenue. Furthermore, TSMC's rapid growth appears all the more appealing as its stock trades at a 25 price-to-earnings (P/E) ratio. While geopolitical tension may have pressured the stock, it is arguably at a low valuation, considering TSMC's rapid revenue growth. Such conditions should serve investors well, especially as advanced chip production charges ahead. Google's search engine demise seems overstated Justin Pope (Alphabet): Technology giant Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG), Google's parent company, seems like a no-brainer to buy and hold for the long term. ChatGPT is garnering much attention, as some fear it will make Google's lucrative search engine obsolete with its ability to gather, summarize, and present information to queries. Despite ChatGPT racking up 5.1 billion web and mobile visits last month alone, Alphabet reported 10% year-over-year growth in Google Search ad revenue in Q1 2025. It's always wise to monitor potential threats, but Google Search is still doing just fine. Investors focusing too much on Google Search risk missing all the other great things happening at Alphabet: The company released Gemini 2.5, its latest AI model. There are over 1.5 billion monthly users of AI overviews in search results. Alphabet surpassed 270 million paid subscriptions (e.g., YouTube, Google One). Google Cloud's revenue grew by 28% and operating income by over 140% in Q1 2025. Waymo is performing over 250,000 weekly autonomous rides, up fivefold compared to a year ago. Ad revenue from Search has long been Alphabet's cash cow, but over time, other aspects of the company could offset any deterioration due to AI competitors, and then some. Analysts estimate Alphabet will grow its earnings by an average of 14.9% annually over the long term, down from over 17% a year ago. In other words, lower expectations mean the market believes growth will slow. But Alphabet's current share price values the stock at a P/E ratio of under 19, a bargain for a global technology leader, even at this slower growth rate. It seems the market has grown overly pessimistic toward Alphabet at this point. That could be a fantastic opportunity that pays off for long-term investors over the coming years. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $351,127!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,106!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $642,582!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon. See the 3 stocks » *Stock Advisor returns as of May 12, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Alphabet, Amazon, and Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has positions in Intel and Qualcomm. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
Globe and Mail
11-05-2025
- Business
- Globe and Mail
Stock Splits Revisited: Here's How 3 High-Profile Stocks Have Performed Since Their Splits.
Few things stoke more investor interest than a stock split. While they don't alter any of a stock's fundamentals like revenue, net income, or free cash flow, splits can create buzz around a stock, bolstering existing momentum or reviving its appeal among the investment community. Yet, there is no sure thing when it comes to the stock market, and not all stocks that undergo a split see big returns. Here, three Motley Fool contributors will review how three high-profile stocks have performed since their most recent splits: Broadcom (NASDAQ: AVGO), Palo Alto Networks (NASDAQ: PANW), and Nvidia (NASDAQ: NVDA). Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Since its split, Nvidia's stock has been stuck in neutral Jake Lerch (Nvidia): It's been nearly a year since Nvidia completed its most recent stock split on June 10, 2024. On that date, the company split its shares 10-for-1, granting each existing shareholder 10 shares for every one share they had owned prior to the split. Since then, Nvidia's stock has essentially moved sideways. However, there have been significant ups and downs. The stock has fallen by as much as 22% at its lowest point (a few weeks ago in early April 2025). It's also experienced a few big rallies, most notably during the last few months of 2024, when shares were up by as much as 24%. Yet, there is a lesson to be gleaned from this meandering price action: Stock prices and fundamentals don't always move in lockstep. Indeed, Nvidia's fundamentals have soared compared to one year ago: Revenue has increased by 36% Net income is up 37% Diluted earnings per share (EPS) have grown by 38% In short, the company is posting excellent results, highlighting Nvidia's predominant role within the booming artificial intelligence (AI) sector. Thanks to those fantastic EPS figures, Nvidia stock now trades at a price-to-earnings (P/E) multiple of 40x. While that's still high for the average stock, it's one of the lowest multiples for Nvidia over the last five years. In fact, the average P/E ratio for the stock over that five-year period is around 80x. NVDA PE Ratio data by YCharts. So, while Nvidia's stock performance since its most recent stock split might appear to be more of a fizzle than a sizzle, remember, fundamentals tell the true story of a company's performance. On that front, Nvidia remains a solid performer. Nvidia wasn't the only stock to split due to AI-driven gains Will Healy (Broadcom): Another stock to benefit significantly from AI is Broadcom. The semiconductor and software giant became a leader in AI as it applied that technology to hardware and applications that serve businesses. In June 2024, AI-driven gains had taken Broadcom to a pre-split price of around $1,500 per share. That prompted the company to announce its first-ever stock split, splitting its shares on a 10-for-1 basis. When that split occurred on July 15, 2024, the split and the rising stock price led to a price of $169.89 per share. As of this writing, it has made gains of approximately 18% in the 10 months since the split. Despite that increase, the path higher was not smooth. It peaked in early February at an intraday high of $251.88 per share. However, it got caught in a generalized sell-off in AI stocks and lost as much as 45% of its value over the next two months. Fortunately for Broadcom bulls, the stock has trended higher since that time and is now approximately 20% off its 52-week high, leaving it in a bear market. The gains are likely not done yet. Admittedly, the P/E ratio of 97 implies that it is a pricey stock. Nonetheless, a deeper look at its valuation places its forward P/E at 30, which appears inexpensive for a top AI stock, particularly with its growth likely to continue. Analysts forecast that profits will grow by 36% this year. The 2026 prediction calls for 19% earnings growth. While the slowing growth rate could delay the recovery of Broadcom stock in the near term, the falling valuation should bode well for its long-term bull case post-split. A stock split couldn't keep Palo Alto Networks' rally alive Justin Pope (Palo Alto Networks): Cybersecurity is one of the hottest growth themes in the technology sector. Palo Alto Networks, a standout for its firewall security, surged 181% between the start of 2023 and when management announced a 2-for-1 stock split on Nov. 20, 2024. The stock price was approaching $400 at that time. Stock splits lower share prices by increasing the total share count. Splits can make a stock easier to buy or sell for individual investors or employees who may want to cash out shares they've earned. Importantly, the share count increases proportionately, so the valuation, measured by the price-to-earnings ratio, price-to-sales ratio, or any other metric you choose, doesn't change. Still, investors tend to applaud stock splits. Unfortunately, Palo Alto Networks hasn't performed very well following the split. The stock is down by approximately 7% since it began trading at its split-adjusted share price on Dec. 16, 2024. Companies tend to conduct stock splits when things are going well, so why has the stock languished? For starters, the market has become increasingly volatile in recent months amid geopolitical conflicts, recession worries, and a trade war between the United States and China. Plus, Palo Alto Networks had become quite expensive following its nearly two-year run into the end of last year. Shares still trade at a hefty 58 times 2025 earnings estimates, which isn't exactly a bargain for a business that analysts estimate will grow earnings by an average of 19% annually over the long term. Patient investors should do well over the next five-plus years if the company can sustain double-digit growth, but overpaying for stocks can stunt short-term returns. The take-home message? Stock splits should never be the sole reason an investor buys a stock. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. 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