Earnings per share (EPS) for the S&P 500 grew at 52% year over year in second-quarter 2026, according to FactSet estimates -- one of the fastest rates of growth in market history. It is also unsustainable.

Big tech companies are benefiting from reported earnings gains from artificial intelligence (AI), which are dragging down free cash flow, while also marking up stakes in start-ups and recent IPOs like SpaceX, which is inflating S&P 500 earnings power.

The market now trades at a forward price-to-earnings ratio (P/E) under 20, which does not look unreasonable. However, if you take a more comprehensive look at the cyclically adjusted P/E ratio (CAPE), this stock market has done something that has only happened twice before.

History suggests that trouble happens next.

One long bull market since 2009

The cyclically adjusted P/E ratio, otherwise known as the CAPE ratio, takes the current price of the S&P 500 index and divides it by the average earnings power of the index over the last 10 years. It does this to smooth out the bumps in earnings from any one year, such as 2026, when earnings power may be temporarily inflated.

The CAPE ratio has been above 30 for most of the last 10 years, and recently hit a new high above 41. The only other time in history the CAPE ratio was above 40 was the dot-com bubble in 1999. The only other time it was above 30? 1929, the peak of the bull market before the onset of the Great Depression.

A small data set is not going to be statistically relevant, and the stock market is a highly complex system, but I think it should be a flashing alarm to investors that the only other times in history that the CAPE ratio went above 30 were eventually followed by a collapse in stock prices.

Image source: Getty Images.

Are AI stocks in a bubble?

This historical evidence should raise the question of whether AI stocks are now in a bubble. It certainly feels frothy, with trillions of dollars in stock market value centered on AI stocks and AI supply chain stocks, such as semiconductors.

AI stocks exhibit characteristics similar to booms and busts in the history of the United States, such as those of railroads, electricity, automobiles, and radios. It didn't matter that the internet changed our lives, but when you price in growth decades before the fundamentals catch up, your share prices are in a precarious spot.

No investor should boldly predict that a stock market crash will happen tomorrow. Nothing in markets is 100% certain. It's possible that the CAPE ratio will keep climbing before the eventual fall, or that the productivity gains from AI will make the tens of trillions in stock market gains worthwhile from an earnings perspective. However, any investor needs to understand the possibility that AI stocks are in a bubble. It doesn't matter how much you use ChatGPT.

S&P 500 Shiller CAPE Ratio data by YCharts.

How to properly position your portfolio

So, what is an investor to do? First, if you are heavily positioned in AI stocks, now might be the time to diversify (especially if you are trading on margin). This does not mean you need to immediately dump all your AI stocks. A lot of these are high-quality businesses that may perform well over the long term, even if it is possible they'll fall 80% in a stock market crash.

Diversification is key for anyone looking to generate strong returns in the stock market through the cycle. With the CAPE ratio near an all-time high, smart investors should look to add stocks from different sectors to their portfolios, as well as some fixed income like Treasury bonds that will help them generate strong performance through any booms and busts.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Anyone seeking dividend income should check out Realty Income (NYSE: O).

It's a real estate investment trust (REIT) -- a company that owns lots of real estate properties, leasing them out to tenants. Since REITs are required to pay out at least 90% of their taxable earnings as dividends, they tend to sport meaningful dividend payouts, and their yields tend to be higher than the average stock.

Realty Income's dividend yield these days is hovering around 5.3%.

Image source: The Motley Fool.

Let's say you want $500 per month ($6,000 annually) in dividend income from Realty Income. How many shares should you buy? Well, its recent monthly payout was $0.271. So divide $500 by that and you'll get 1,845 shares. At a recent share price of $62, those shares would cost you $114,390.

Why invest in Realty Income?

There are multiple reasons to consider buying Realty Income. For example:

• That fat dividend will grow over time, and it is paid monthly, not quarterly.
• The stock's valuation is attractive, with a recent forward-looking price-to-earnings (P/E) ratio of 35, below the five-year average of 40, and a recent price-to-sales ratio of 9.6, below the five-year average of 10.5.
• If you're worried about the stock market crashing this year, Realty Income has a low beta of 0.72, meaning that it tends to rise or fall less than the overall market. So if the S&P 500 drops by, say, 10%, Realty Income's stock might fall by around 7.2%, based on past performance.
• It owns approximately 15,500 leased properties across all 50 states and parts of Europe, and they span 92 industries. That diversity is important.
• It employs triple-net leases, which require tenants to cover real estate taxes, property insurance, and operating expenses. That keeps things simple for the company and reduces its risk.
• Its portfolio occupancy level was recently 98.8% and has never been below 96%.
• It's looking to juice its growth via data centers. It's partnering with other companies to develop data centers.

Give this solid dividend payer a closer look if you're seeking income.

Selena Maranjian has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

In typical fashion, Tesla (NASDAQ: TSLA) has been an extremely volatile stock to own in the past five years. During this time, the share price fell at least 30% on three separate occasions.

But unlike historical trends, this electric vehicle (EV) stock has underperformed the S&P 500 index over the trailing half decade. It's up only 54% during this time (as of Sept. 4), while the benchmark has climbed 71%.

This business continues to live in the spotlight, which will certainly result in persistently heightened volatility for investors to deal with. Where will Tesla be in five years?

Image source: The Motley Fool.

Dreams are better than reality

On Sept. 3, Tesla held an invite-only event launching its much-hyped Cybercab vehicle. The car design, which comes with no pedals and no steering wheel, was revealed nearly two years ago in October 2024. However, the company finally introduced a small number of Cybercabs to its Austin robotaxi fleet. There are 250 vehicles in the total robotaxi fleet (also including model Y's) that Tesla operates both in Texas and Florida.

As of this writing on the morning of Sept. 4 just after the market open, shares are down 6%. Investors initially appear to be disappointed by this news.

The latest event perfectly highlights what being a Tesla shareholder feels like. So far, the business has been defined not by its current operations, but by the possibility of outsized success in the future. New product or service announcements need to wow the followers. When they don't, there can be volatility.

Even though the stock has lagged the broader index in the past five years, the company sports a $1.1 trillion market capitalization, making it one of the most valuable enterprises on Earth. The market values shares based mostly on the narrative. For Tesla, the dreams of what it could become hold more weight than the reality on the ground.

But this can only last for as long as the market remains patient. The stock's dip might be an early warning that the investment community wants tangible results sooner rather than later.

Driving uphill on a steep road

Let's assume that in five years, Tesla shows notable progress in its two most important areas: robotaxi and humanoid robotics. For the robotaxi, this means expanding into many more markets across the country and even internationally. For the humanoid robotics, it means increasing production capacity, selling to enterprise customers, and possibly selling to consumers as well.

I believe Tesla bulls would view this outcome favorably. This optimistic scenario, though, might fail to lift the stock enough to outperform the S&P 500 index.

Of Tesla's $28.2 billion in second-quarter revenue, virtually nothing comes from robotaxi and robotics. I'd bet that in five years, the majority of the company's sales will still come from EVs. Even with technological progress being made, which is what the market wants, it could be some time until these ambitious projects move the financial needle in a meaningful way.

History says that this is the case with Tesla. The market is captivated by the story. But reaching milestones takes longer than expected.

This "Magnificent Seven" stock currently trades at around $353. According to consensus analyst estimates, Tesla will report earnings per share of $1.77 this year. Assuming this figure rises to $8.85 in 2031, a 400% gain, shares still trade today at a steep valuation of 40 times that extremely rosy forecast five years from now. Skyrocketing profits aren't enough.

Not even the smartest analysts can confidently predict what this business will look like in the future, adding tremendous uncertainty. Tesla could end up making good on all its promises. However, the timing and magnitude of the financial impact is a huge unknown. And the valuation shows that the stock is priced for perfection.

Investors who buy Tesla shares today shouldn't be surprised if the return disappoints between now and 2031.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

Each October, the Social Security Administration announces the cost-of-living adjustment (COLA) for the subsequent year. COLAs are designed to ensure benefit payments increase in lockstep with inflation, thereby preserving the purchasing power of Social Security.

The Senior Citizens League (TSCL) recently revised its 2027 COLA forecast lower. Despite the downward revision, there is some good news for retired workers on Social Security. Here are the important details.

Image source: Getty Images.

TSCL estimates Social Security's 2027 COLA will be 3.6%

The Senior Citizens League (TSCL) is a nonpartisan advocacy group focused on issues that impact seniors, especially Medicare and Social Security. TSCL conducts surveys and publishes reports, but the group is best known for its forecasts concerning Social Security's annual cost-of-living adjustments (COLAs).

Each month, TSCL updates its Social Security COLA forecast for the upcoming year based on a statistical model that incorporates known inflation data from the Consumer Price Index (CPI) as well as projected inflation data based on interest rates and unemployment.

In May, TSCL said Social Security's 2027 COLA would be 3.9%. But that number was based on the incorrect assumption that CPI inflation would continue to rise as the energy shock tied to the Iran war drove prices up across the economy. In reality, CPI inflation has moderated since May despite the ongoing conflict in the Middle East.

In August, TSCL adjusted its 2027 COLA forecast down to 3.6% to account for new inflation data. While that is modestly below estimates made in the preceding months, it would still be 0.8 percentage points higher than the 2026 COLA and it would represent the largest percent increase in benefits since 2023.

The chart below shows how a hypothetical 3.6% COLA in 2027 would impact the average Social Security benefit paid to retired workers, spouses, survivors, and disabled workers.

Data source: Social Security Administration. The chart shows the average monthly Social Security benefit before and after a hypothetical 3.6% COLA in 2027.

On the surface, TSCL reducing its COLA forecast from 3.9% to 3.6% seems like bad news. It means retired workers on Social Security will receive less additional benefit income next year than originally anticipated. However, that bad news comes with an important silver lining.

Social Security benefits are on pace to maintain their purchasing power next year

Social Security's annual COLAs are based on a subset of the Consumer Price Index known as the CPI-W, which tracks price increases based on the spending habits of workers who live in urban households where at least half of total income comes from clerical or wage occupations.

In other words, CPI-W tracks inflation based on how working-age adults spend money. But critics argue the metric should not be used for Social Security's COLAs because workers generally spend money differently than retired workers. In particular, retirees typically spend more on housing and medical care, which means the CPI-W puts too little weight on those spending categories.

What's the solution? Critics of the CPI-W usually prefer another subset of the CPI known as the CPI-E, which tracks inflation based on the spending habits of individuals aged 62 and older. CPI-E inflation outpaced CPI-W inflation by 0.7 percentage points annually over the last three years, which arguably means Social Security benefits lost more than 2% of their purchasing power during that period.

However, CPI-E inflation is currently running even with CPI-W inflation in 2026. If that trend holds through September -- inflation data from July, August, and September is used to determine the official COLA -- 2027 will be the first year in which Social Security at least maintains its purchasing power since 2023. That's good news for retirees, despite the recent downward revision in TSCL's COLA forecast.

The Motley Fool has a disclosure policy.

Uh-oh. Here we go again!

It's been nearly five years since Sir Peter Beck, the founder and CEO of Rocket Lab (NASDAQ: RKLB), announced plans to build a Neutron rocketship in 2020. The 43-meter-tall craft, incorporating an expendable second stage within a reusable first stage, can carry 13 tons of cargo to Low Earth Orbit -- 43 times the payload of Rocket Lab's current Electron rocket.

Assuming, that is to say, it ever launches.

Rocket Lab, you see, has been promising to launch Neutron for years -- first positing a 2024 launch date, then "mid-2025," followed by late 2025, Q1 2026, and most recently late 2026. Last month, the deadline slipped yet again when Beck told investors on a conference call he was targeting "delivery of Neutron to the pad in Q4 2026."

That sounds like a reiteration of the late 2026 goal. Unfortunately, delivering the rocket to the pad is just the first step. Next follows a series of pre-launch tests preceding the actual launch.

And as a result, it's entirely possible we won't see Neutron take off before 2027.

Image source: Rocket Lab.

"An-ti-ci-pa-tion, anticipa-yay-shun! [Rocket Lab's] making us wait"

As you can imagine, investors in Rocket Lab stock are getting just a wee bit impatient with all the delays. And Rocket Lab stock is down 24% in the past two weeks, or nearly $20 per share.

The distress is understandable. (Still, one imagines they'd be even more upset if Rocket Lab moved too fast and launched a rocket that blew up!) Bearing that in mind, here's another date that Rocket Lab investors might want to focus on instead, just in case Rocket Lab has to delay launch yet again:

June 30, 2027.

What happens on June 30, 2027?

Three months ago, Rocket Lab announced it would acquire iconic satellite communications company Iridium Communications (NASDAQ: IRDM) in an $8 billion deal slated to close in "mid-2027."

Granted, that deadline's a bit fuzzy. But June 30, 2027, is about as close to mid-2027 as one can get, so that's the date I'm hoping we will see Iridium officially become part of Rocket Lab. And why is this important?

Why Iridium is important to Rocket Lab

Neutron is great and all, don't get me wrong. I'm personally looking forward to seeing it fly -- maybe even in person!

But as an investor, I realize that even the $50 million in revenue Neutron will bring to Rocket Lab with each flight, with 44% gross margins, pales in significance to the $884 million in annual revenue -- with 72% gross profit margins, according to data from S&P Global Market Intelligence -- that Rocket Lab will receive once it acquires Iridium.

Analysts forecast that in 2027, Iridium will earn more than $135 million in GAAP profit and generate more than $313 million in positive free cash flow. That's enough profit and cash to offset all the losses and cash burn at Rocket Lab, and turn Rocket Lab instantly profitable and free cash flow-positive -- a full year before Wall Street analysts anticipated that would happen.

To me, this makes June 30, 2027, the date to watch. Assuming Rocket Lab can close the deal on time, it'll be a much more attractive investment on that date -- with Neutron or without it.

Rich Smith has positions in Rocket Lab. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.

Over the course of 2026, the market has swung from a "SaaSpocalypse" panic that pushed software-focused exchange-traded funds (ETFs) down by roughly 30% to a recognition that artificial intelligence (AI) could be a boon for the same companies it was previously expected to demolish.

However, despite this sell-off and subsequent rebound, the iShares Expanded Tech-Software Sector ETF (NYSEMKT: IGV) remains down 4% over the last 12 months compared to the S&P 500's total returns of 21%.

While the fears of AI disruption may have begun to abate (at least for software-as-a-service stocks), there are still plenty of compelling opportunities in the space. Below, we will look at a top-tier option that remains 41% below its high and explain why the SaaS stock's once-in-a-decade valuation and wide moat make it an excellent long-term buy.

Tyler Technologies: Surviving (and thriving with) AI

Tyler Technologies (NYSE: TYL) combines niche-specific vertical software onto a single, mission-critical platform that acts as the operating backbone for government agencies. Working with state and local entities, courts and justice departments, and school and public administration customers, Tyler and its platform benefit from high switching costs, as well as the inherent inertia of government agencies, which tend to be reluctant to overhaul their systems.

In addition to this customer stickiness, AI companies can't really sneak into Tyler's territory (at least, not without the company using it to its advantage) due to the extensive regulations around government agencies' behaviors, and the legal risks inherent to allowing "vibecoded" solutions to manage citizen or governmental data. Furthermore, Tyler Technologies has been a roll-up acquisition machine, targeting companies with software solutions for niche verticals (think jury selection algorithms or student transportation and bus routing) that its potential peers have no interest in competing with because of their small size.

Image source: Getty Images.

Despite being somewhat "weird" niche processes, these types of solutions are mission-critical for local governments. This means they can't easily be cut from government budgets, giving Tyler strong pricing power. It's the market leader at handling these types of vertical software solutions across government agencies and boasts decades of state- and municipality-specific insights and customizations that would be hard for any peer to replace without spending millions, if not billions of dollars. For example, DMV processes differ in some aspects across every state, but Tyler has customized its solutions state by state to comply with all necessary regulations.

Now the company is actively transitioning its government customers to the cloud with its SaaS solutions, enticing them to switch with the allure of AI-powered offerings. Tyler Technologies explains that only its cloud services customers can access AI offerings like document processing, permit review, reconciliations, resident support, and report writing.

With sales and SaaS revenue up 8% and 22%, respectively, and free-cash-flow margins continuing to march toward management's low-30% goal by 2030, it seems as though the AI trend is adding momentum to Tyler's SaaS shift rather than disrupting its business.

Tyler's once-in-a-decade valuation

Though Tyler Technologies stock has jumped 22% in the last month, the company's valuation on a free-cash-flow basis still sits near a 10-year low.

TYL Price to Free Cash Flow data by YCharts.

Trading at just 23 times free cash flow (or 29 times even after accounting for stock-based compensation), Tyler remains more reasonably priced than it has been at any time over the past decade. This discount exists despite sales growth slowing only marginally from 15% annually over the last decade to an expected 9.5% this year, based on management's latest guidance.

Best yet, the company has been buying back its shares hand over fist. As the stock plummeted in 2026, management jumped in and lowered Tyler's outstanding share count by 6%, retiring a hefty chunk of stock at historically discounted valuations.

With management raising Tyler's 2030 free-cash-flow guidance to between $1.1 billion and $1.2 billion -- a range they say doesn't include the potential of acquisitions or new AI solutions -- the company's current market cap of just $15 billion could be outgrown quickly. Considering Tyler Technologies' track record of success at integrating acquisitions, paired with the fact that its newly purchased roll-ups have grown their sales twice as fast as the company's core businesses, there may be more upside in the S&P 500 stock than the market is giving it credit for today.

Josh Kohn-Lindquist has positions in Tyler Technologies. The Motley Fool has positions in and recommends Tyler Technologies. The Motley Fool has a disclosure policy.

With interest rates on U.S. Treasuries now firmly in multiyear-high territory, income investors have much to think about. The sort of yields that only dividend stocks were able to offer just a short while ago can now be matched -- if not topped -- by longer-term bonds. For perspective, 30-year Treasuries are now yielding 5.25%. An income-generating stock is going to need to bring something special to the table, so to speak, to justify its risk when safer and similarly yielding bonds are available.

There are some names out there that are up to the task, however, even if you're limiting your options to S&P 500 (SNPINDEX: ^GSPC) constituents. My pick of the litter this month is Verizon Communications (NYSE: VZ), which at the current share price boasts a forward yield of 5.7%.

Verizon and its dividend are built to last

Verizon, of course, doesn't need much in the way of introduction. As of the middle of this year, nearly 147 million different mobile devices were connected to its wireless network, making it the United States' top cellphone service provider. It's serving nearly 350,000 broadband internet customers as well.

Its sheer size isn't the big selling point, though, and for that matter, neither is its sizable dividend yield (although it certainly doesn't hurt). Rather, the more nuanced reason Verizon is my top S&P 500 dividend stock pick is that the company's got 19 consecutive years of dividend hikes under its belt, and there's no sign that streak is going to come to an end.

Think about it. For better or worse, consumers are practically glued to their mobile phones, and their smartphones in particular. Pew Research reports that 98% of adults in the United States own a mobile phone, with over 90% of those being smartphones. And among those smartphone owners, 45% made an attempt within the past 12 months to use them less often -- cutting back on the 5-plus hours that Harmony Healthcare IT says they're staring at their device's screens -- but only one-fourth of that 45% say they were very successful in their efforts.

Image source: Getty Images.

Connect the dots. Americans are effectively addicted to their mobile phones. Mentally healthy or not, they're not likely to disconnect their pocket-sized connections to the rest of the world now or anytime soon. This means plenty of reliable cash flow ahead for the nation's top name in the business.

Just understand what it is, and isn't

There's a trade-off to owning a stake in Verizon, to be clear. That's a lack of capital gains. While the telecom giant is entrenched, the wireless market is saturated. The bulk of its growth potential comes from population growth and price increases, neither of which is a huge growth engine. There are more effective and productive ways of driving capital gains (and still collect decent dividends along the way). This stock should be viewed strictly as an income and dividend growth holding.

For that particular purpose, though, you'll find few -- if any -- better options than this one.

So, don't overthink it. The yield is solid, and with the stock priced at only about 10 times this year's expected earnings, it's not likely to run into a valuation headwind anytime soon, either.

James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

Billionaire Bill Ackman runs Pershing Square, one of the 20 most successful hedge funds in the world as measured by net gains since inception, according to LCH Investments. That makes him a good source of inspiration for individual investors

Ackman made a number of trades in the second quarter, but the two listed below warrant closer inspection:

• Ackman sold his stake in Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), an AI stock up 100% in 18 months.
• Ackman started a position in Netflix (NASDAQ:NFLX), a mega-cap stock down 42% from its record high.

Here's what investors should know about Alphabet and Netflix.

Bill Ackman speaks at an event for the Pershing Square Sohn Cancer Research Alliance. Image source: Getty Images.

Alphabet: The stock Bill Ackman sold

Alphabet reported strong financial results in the second quarter despite missing estimates on the bottom line. Revenue rose 24% to $120 billion, marking the 12th consecutive quarter of double-digit growth. Meanwhile, GAAP operating income (which eliminates unrealized gains from its investment in SpaceX) increased 31% to $41 billion.

Alphabet is primarily a digital advertising company supported by a plethora of popular web properties, such as Google Search and YouTube. Advertising products and services still account for more than two-thirds of total revenue, but cloud computing has become an increasingly consequential part of the big picture.

Google Cloud revenue rose 82% in the second quarter, the fifth consecutive acceleration, driven by strong demand for artificial intelligence (AI) infrastructure. For the first time, the company earned revenue by selling custom AI accelerators called tensor processing units (TPUs) to external customers, representing an attempt to compete more directly with the market leader Nvidia.

Meanwhile, CEO Sundar Pichai said Gemini APIs (i.e., interfaces that let outside companies integrate Gemini models into their own applications) now process about 22 billion tokens per minute, up from 16 billion one quarter earlier. Pichai also said 90% of Fortune 100 companies use Gemini Enterprise, an AI platform for business work.

In total, Google gained two percentage points of market share in cloud infrastructure and platform services in the past year, and custom chips and proprietary models could certainly drive further share gains in the future. Google Cloud is running circles around its two largest rivals, Amazon and Microsoft, which reported cloud revenue growth of 37% and 43%, respectively, in the most recent quarter.

So, why did Bill Ackman sell his shares? While Alphabet is well-positioned for long-term growth, it faces near-term headwinds related to AI infrastructure spending. In the second quarter, Alphabet reported negative free cash flow for the first time as a public company. It also raised its 2026 capex guidance to $200 billion, up from $91 billion last year.

Negative free cash flow could make the stock volatile as bulls and bears squabble about whether the company is spending too much money on AI infrastructure. Indeed, the stock fell sharply following the second-quarter earnings report, and still trades 2% below the pre-report level as of Sept. 4.

Netflix: The stock Bill Ackman bought

The streaming industry has become much more crowded over the last decade, but Netflix is still the dominant player by virtually every important metric. It has more monthly active users, generates more revenue, boasts better retention rates, and accounts for a larger percentage of TV viewing time than any other subscription streaming service.

In turn, Netflix has a data advantage. With deep insight into viewing behavior, the company has an edge when personalizing content and making production decisions. Indeed, Netflix consistently produces more engaging content than its rivals. Among the 10 most-watched original streaming series and movies in the final week of August, Netflix made four of the series and six of the movies.

Netflix is down 42% from its high in June 2025, primarily because the market is worried about the company's growth prospects after it failed to win bidding wars for Warner Bros. Discovery and Roku. However, I think the market is underestimating Netflix. The company has pricing power in the streaming space, a market forecast to grow at 10% annually through 2030, and it has largely untapped opportunities in advertising, live sports, and theatrical releases.

Wall Street estimates Netflix's earnings will increase at 21% annually over the next three years. That makes the current valuation of 24.7 times earnings look cheap. Indeed, most analysts view the stock as undervalued. Netflix has a median target price of $94 per share, which implies 20% upside from the current share price of $78. Patient investors should feel comfortable buying a small position today.

Trevor Jennewine has positions in Amazon, Nvidia, and Roku. The Motley Fool has positions in and recommends Alphabet, Amazon, Netflix, Nvidia, Roku, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.

The next Federal Reserve meeting is on Wednesday, Sept. 16, and it could be a doozy because the central bank could deliver its first interest rate hike in more than three years. Many professional investors believe that will happen as Fed funds futures implied a 59.4% chance of a rate increase as of Sept. 4.

Inflation tells the tale of why a hawkish stance is very much on the table for the Fed. While headline inflation is expected to cool this month, a deeper dive reveals that Core Personal Consumption Expenditures (PCE) are climbing. That gauge, which is a preferred tool of the Federal Open Market Committee (FOMC), strips out volatile energy and food prices, implying that consumers are paying higher prices for an array of goods beyond gas and groceries.

This healthcare could be just what the doctor ordered if interest rates rise. Image source: Getty Images.

So it's not a stretch to say that the Fed's hand may be forced and that a rate hike is imminent. Investors may find some rate-hike protection in healthcare stocks and exchange-traded funds, such as the State Street Health Care Select Sector SPDR ETF (NYSEMKT: XLV).

XLV's relevancy then and now

Time will tell whether the Fed merely nudges rates higher once or twice, or embarks on a rate-tightening regime à la 2022-23. Ideally, it's not the latter, but if it is, this healthcare ETF has a favorable recent history. When the Fed began raising interest rates in 2022 to curb inflation, the S&P 500 tumbled 18.6%, while this healthcare ETF lost just 1.1%.

XLV Total Return Level data by YCharts

The $45 billion healthcare ETF's history against the backdrop of Fed tightening is relevant here and now because of some wonky correlation stuff. Put simply, the correlation between equities and 10-year Treasury yields is now negative, indicating that Mr. Market is walking on sticky inflation eggshells.

Defensive sectors, including healthcare, have a history of proving durable or less bad when the aforementioned "correlation conundrum" appears. One reason is that those groups are chock-full of dividend-paying stocks, which can serve as a buffer when broader benchmarks slip. For its part, the SPDR ETF carries a 30-day SEC yield of 1.47%.

The ETF is home to four Dividend Kings -- those companies that have raised payouts in 50 consecutive years -- three of which are among the fund's top 10 holdings. That trio is led by Johnson & Johnson, which is the healthcare ETF's second-largest component.

Inflation backs the case for this ETF

Some certainties make the SPDR ETF a smart idea this month. First, new Federal Reserve Chair Kevin Warsh is eager to ward off inflation. Second, larger, higher-quality healthcare stocks tend to be somewhat insensitive to rate hikes while still generating solid earnings when Fed hawkishness cools economic growth.

Another certainty is that Fed rate actions, be they cuts or increases, take time to work their way through the economy. That is to say, a rate hike could arrive this month, but its inflation-cooling effects may not be felt for months. If that proves to be the case, the healthcare sector's reputation for growing earnings in inflationary environments becomes all the more coveted, underscoring why some experts call the group the "antidote" for inflationary times.

So the State Street Health Care Select Sector SPDR ETF isn't a cure for undesirable monetary policy, but it is a smart investment when rates rise.

Todd Shriber has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

Nobody wants to see their portfolio fall by 30%.

That's why a lot of investors decide to sell their stocks when it looks like the risk of a market crash is getting higher. If you can get out before the drawdown, you might be able to avoid at least some of the losses, wait for things to improve, and hopefully get back in when prices are lower. At least, that's the idea.

It sounds reasonable enough. In reality, it's incredibly difficult to pull off. Even a lot of the pros have trouble doing it with any consistency.

The true downside of market timing comes from what you might miss out on. History suggests that trying to time a crash could actually cost you a lot of money.

Image source: Getty Images.

Missing just a few good days can make a huge difference

Fidelity recently did a study that looked at what would have happened to $10,000 invested in the S&P 500 (SNPINDEX: ^GSPC) from the beginning of 1998 through the end of 2025.

An investment that was bought and held throughout this time period would have turned into roughly $616,000. But missing out on the five best days during that time frame would have reduced the total return to just $380,000. That's nearly a quarter-million dollars lost!

This is an important consideration because big down days and big up days often get clustered together during periods of high volatility. If you're staying out of the S&P 500 because of the down days, there's a good chance you're missing out on the up days, too. That will negatively affect your long-term returns.

Here's the move I'd make with the S&P 500 instead

If you're a long-term investor, continuing to buy the S&P 500 through a fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO) makes the most sense.

Simply put, volatility is the price of admission for owning stocks. Corrections and bear markets should be expected if you're investing for years and years. It's how you handle them that matters most. If you continue buying through market pullbacks, you get the opportunity to buy shares at discounted prices. Doing this could actually help improve your long-term returns.

History provides some useful perspective. Vanguard calculated that from 1980 to 2023, bear markets produced an average loss of 30% and lasted more than nine months. Bull markets, on the other hand, generated an average gain of 96% and lasted nearly three years.

Nobody knows when the next crash will come, but investors with time horizons of decades don't really need to worry about that. They just need to know to ride out the short-term volatility.

Market pullbacks don't need to be feared, but if you give in to the fear, it could prove costly in the long run.

David Dierking has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

The S&P 500 (SNPINDEX: ^GSPC) is again on its way to a strong annual return. The artificial intelligence (AI) boom has helped the index climb a wall of worry that would likely have derailed many past bull markets. After all, the U.S. remains in conflict with Iran, consumers are struggling with high costs, and long-duration interest rates have been edging higher.

AI has sparked one of the largest corporate spending booms in history, with major tech companies investing an unfathomable amount of money in AI infrastructure and seeing strong returns. At the same time, AI investments are helping companies across industries reduce costs and improve efficiency, boosting corporate earnings.

However, while the market remains in bull mode, a valuation red flag from the dot-com era has just resurfaced.

Image source: Getty Images

For three consecutive months, the S&P 500's cyclically adjusted price-to-earnings (CAPE) ratio has remained above 40. This metric was devised by famed economist Robert Shiller in 1988 to help smooth out earnings cyclicality and is based on a 10-year average of inflation-adjusted earnings.

To put that into context, the CAPE ratio has only hovered above 40 one other time in history, and that was right before the tech bubble burst in 2000. That 40 score is about 50% above its 20-year historical average and well above its historical baseline of around 17.

Meanwhile, history shows that the S&P 500 has never had a positive three-year return after the CAPE index finished a month above 40.

Why history may not repeat itself

Despite history indicating that the market could be in for a rough ride over the next three years, there is no guarantee this will happen.

First, the sample size of the CAPE hitting 40, is very small. Second, the S&P 500 is much different today than it was 10 years ago, but the CAPE ratio gives the 2016 S&P 500 index as much weight as it does today's S&P 500.

A decade ago, the benchmark index had far more exposure to lower-margin, asset-heavy industrial and energy companies. Today, the index is heavily weighted toward high-margin tech companies that generate tremendous operating cash flow and have fortress balance sheets.

At the same time, AI looks like a huge technological game changer that is quickly moving the needle, while the technology innovation curve is also accelerating. While the internet was a massive breakthrough, it took telecom and web infrastructure companies over a decade to generate a return on their investment. Amazon recently said it expects to break even on its AI infrastructure investments within two to three years, while Space Exploration Technologies (SpaceX) has said it will achieve payback within a year. At the same time, AI is helping corporate America save costs and become more efficient, driving profit growth.

Most large tech companies that currently dominate the S&P 500's top holdings aren't expensive based on future earnings expectations. Meanwhile, if hyperscalers (owners of large data centers) can continue to show strong returns on their AI infrastructure investments and enterprise customers continue to use AI to help drive operational efficiencies, corporate earnings growth should continue to outpace earlier years. The CAPE ratio does not capture what could be a major fundamental shift in the market driven by AI.

How investors should play it

A CAPE ratio of 40 isn't an automatic sign that you should dump your stock holdings and start hiding cash under your mattress. However, it is a warning signal, and if AI infrastructure spending slows dramatically in the coming years, you can be sure the S&P 500 will take a hit, given its current tech-heavy makeup.

That said, there is no need to panic. I'd personally follow Warren Buffett's current strategy and keep some cash on the sidelines in case the market does see a major pullback. Otherwise, I'd keep dollar-cost averaging into top exchange-traded funds (ETFs), such as the Vanguard S&P 500 ETF (NYSEMKT: VOO), because generally, trying to time a market crash is a foolhardy endeavor.

Geoffrey Seiler has positions in Amazon and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Amazon and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

By now, you probably don't need an elaborate explanation about Space Exploration Technologies' (NASDAQ: SPCX) initial public offering (IPO). The company's June debut was the largest IPO in history, raising roughly $85 billion at a valuation of around $2.1 trillion. For a brief moment, SpaceX was actually more valuable than Amazon. This part of the story is old news for those who have been following the stock, though.

What's more interesting is how SpaceX has traded since its IPO pop. Just days after the IPO, shares reached an intraday high of roughly $226. However, after the company's initial euphoric ascent, concerns about SpaceX's aggressive capital expenditure plans and the potential for post-IPO lockup expirations to pressure the stock fueled a flurry of selling prior to its first earnings report as a public company. After bottoming out at just under $105, shares have started to rebound again.

Still, SpaceX now trades roughly 34% below its post-IPO peak, and in the vicinity of the $150 per share price where it opened on its first day of trading. Investors may be wondering whether this is an opportunity to buy the dip or the precursor to yet another drawdown. While I don't have a crystal ball, I do have a useful data set that shows a consistent pattern among mega-hyped IPOs. Spoiler alert: The direction of SpaceX stock is anyone's guess. Investors who want to add it to their portfolios should buckle up and prepare for a bumpy ride.

Image source: Getty Images.

Analyzing blockbuster IPOs

The first IPO I am going to analyze is Palantir Technologies (NASDAQ: PLTR), which went public via a direct listing in September 2020. Shares opened at $10 and rocketed to a high of around $45 within the first year. At the time, Palantir was not seen as a darling of the artificial intelligence (AI) software complex. Instead, the company's early ascent was driven by meme stock era updrafts, fueled by Reddit users on the WallStreetBets forum. After that initial parabolic rise, Palantir spent most of 2021 giving back its gains and eventually settled in the mid-$20s range.

Snowflake (NYSE: SNOW) had a similar arc to Palantir, although the degree to which the stock moved was more dramatic and prolonged. The data warehouse specialist priced its IPO at $120, but shares actually opened their first day of trading at around $245. Before the end of 2020, Snowflake stock had surged to almost $400. While shares then sold off from this peak, Snowflake was still changing hands at prices of around $300 one year following its IPO.

Those two performances might suggest IPO investing usually leads to multibagger gains, but smart investors know there is more to this analysis. Figma (NYSE: FIG) is where the cautionary tale begins.

Figma stock opened at $85 last July and closed its debut session above $115. The very next day, shares spiked to nearly $143. Sounds great, right? Unfortunately for those who chased the momentum, Figma stock eventually crashed -- bottoming near $17 this spring. While Figma has started to show some signs of a comeback, the stock still experienced a peak-to-trough drawdown of more than 80%. That is absolutely brutal.

Cerebras (NASDAQ: CBRS) is a semiconductor company that went public earlier this year. While the stock hasn't reached its first anniversary as a public company, I still see the direction of its price action as useful information.

The Cerebras IPO was priced at $185, but early interest pushed its opening day first-trade price to $350. On that first day of trading, Cerebras stock touched $386. But over the last few months, shares have been all over the place -- ranging as low as $170 and swinging as high as $250. Its current price represents a drawdown of roughly 55% from its opening peak.

Tech IPOs tend to follow a similar path

Back in July, wealth management firm SCS Financial put together an interesting analysis featuring the performance of nearly two dozen IPOs across the technology and tech-enabled services landscapes.

The data includes offerings as far back as the late 1990s, when Amazon and Nvidia went public, as well as a number of early to mid-2000s names like Alphabet, Netflix, Facebook (now Meta Platforms), Tesla, and Uber. The most recent IPOs in the data set included, unsurprisingly, Snowflake, Palantir, and Cerebras.

The takeaway was that the stocks in this cohort experienced a median decline of about 53% from their post-IPO highs. The report also found that IPOs as a broader group have trailed the S&P 500 meaningfully over the last decade or so. For reference, since its inception in late 2013, the Renaissance IPO ETF has significantly underperformed the benchmark index. That ETF holds IPO stocks from recent years such as CoreWeave, Astera Labs, Reddit, and Rubrik. The fund holds onto its positions for up to three years before exchanging them for new IPO stocks.

IPO data by YCharts.

Where could SpaceX stock be trading by June 2027?

If I apply the same median 53% haircut to SpaceX's $226 peak, then a potential floor for the stock sits somewhere around $105 (which is about where it sat at its lowest point so far). On the more extreme end -- closer to what Figma experienced -- SpaceX stock could bottom closer to $45. I don't think that will happen, though.

If I put the entire peer group in this analysis together, a defensible range for SpaceX stock one year after its IPO could be something around $105 on the realistic bearish end, roughly $160 in a base case, and potentially upward of $200 in an upside scenario that mirrors those IPOs that have displayed the rare ability to reclaim and subsequently build on prior highs.

If you invest $10,000 today at SpaceX's current $147 share price, then it could be worth anywhere between the following by next June:

• Bear case ($105): Worth about $7,100 -- a loss of roughly 29%.
• Base case ($160): Worth about $10,900 -- a modest gain of roughly 9%.
• Bull case ($210): Worth about $14,300 -- a gain of roughly 43%.

While none of this is a perfect forecast, it does represent a series of plausible outcomes supported by comparably hyped IPOs. Ultimately, the analysis here serves as a reminder that even category-defining companies like SpaceX can be particularly risky short-term investments if you chase them when they're at the wrong altitude.

Adam Spatacco has positions in Alphabet, Amazon, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Figma, Meta Platforms, Netflix, Nvidia, Palantir Technologies, Reddit, Snowflake, and Tesla. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

The "Magnificent Seven" technology stocks have powered the S&P 500 higher in recent years, and this is thanks to their position in the growth area of artificial intelligence (AI). Most of these players are involved to a certain degree in the field, and at the same time, they offer investors well-established, profitable businesses. So, when you buy a "Magnificent Seven" stock, you gain the safety of a company that's proven itself and the potential for a new wave of growth ahead.

You might expect these particular stocks to trade at lofty valuations, but many of them actually are quite reasonably priced right now. And one in particular -- a company that's already delivering billions of dollars in revenue from its AI efforts -- is dirt cheap. This is the best bargain in the "Magnificent Seven" right now. Let's check it out.

Image source: Getty Images.

A group of AI leaders

First, let's start out by identifying these exciting tech players. They are Apple, Amazon, Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), Meta Platforms, Microsoft, Nvidia, and Tesla. They specialize in different tech fields -- from smartphones to cloud computing and even electric vehicles -- but they each are involved in AI to some extent, so they may benefit as this technology evolves.

Of this bunch, today, the best bargain is also the cheapest in relation to forward earnings estimates, and this is Alphabet.

Trading at only 16x forward earnings estimates, it looks dirt cheap considering its track record of growth and long-term prospects.

AAPL PE Ratio (Forward) data by YCharts

Most of us know Alphabet best for something we may use daily. And that's Google Search. The platform is the most popular search engine worldwide, with more than 90% market share, and is also the key to Alphabet's billion-dollar revenue. Advertisers pay to promote their products and services to us across the Google platform, and this has created a steady revenue growth engine for Alphabet.

In the recent quarter, Google ad revenue climbed 14% to more than $81 billion -- this is on a total of $119 billion in revenue for the company.

So, this is a revenue stream the company can rely on, and that creates a certain sense of safety for investors. This is a long-proven business model that works.

The potential for explosive growth ahead

Meanwhile, investors also may benefit from potentially explosive growth in the quarters to come as Alphabet has become a major player in AI. The company has built its own large language models, such as Gemini, and these are helping Alphabet in many ways. Alphabet's AI is making Google Search better, improving the ad experience and results for advertisers, and expanding the offerings of Google Cloud. Today, customers rush to Google Cloud for both AI and non-AI products and services, and all of this is significantly lifting revenue.

For example, in the second quarter, Google Cloud revenue surged 82% to more than $24 billion. In the second quarter of last year, cloud revenue already was considered strong with 32% growth to reach about $13 billion -- but this now seems small compared to today's figures.

And just recently, Alphabet announced more good news. The Gemini app surpassed one billion monthly users, a move that makes it Alphabet's fastest-growing product ever. This is key because it shows users are spending more and more time on Google, something that should support growth in advertising.

Alphabet stock has advanced about 8% so far this year, but with this performance, it's underperforming the market.

Why hasn't the stock climbed higher? Investors have worried about tech companies' heavy investments in AI infrastructure and whether the revenue opportunity will make it all worthwhile. This has prompted some to shy away from players such as Alphabet, which has poured billions into compute and data centers.

I see this as creating a fantastic buying opportunity. Demand for AI remains high, and this is likely to continue as AI is applied to real-world needs. All of this favors ongoing growth at Alphabet, and this, along with current valuation, makes it the best bargain in the "Magnificent Seven."

Adria Cimino has positions in Amazon and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.

Although the stock market has advanced under most presidents, the annualized returns of the iconic Dow Jones Industrial Average (DJINDICES:^DJI), benchmark S&P 500 (SNPINDEX:^GSPC), and innovation-driven Nasdaq Composite (NASDAQINDEX:^IXIC) are higher with President Donald Trump in the White House than under most other presidents.

During Trump's first term, the Dow, S&P 500, and Nasdaq Composite gained 57%, 70%, and 142%, respectively. His second, non-consecutive term has delivered an encore performance, with the Dow, S&P 500, and Nasdaq rallying 22%, 28%, and 34% through the closing bell on Sept. 2.

The stock market has thrived under President Trump. Image source: Official White House Photo by Andrea Hanks, courtesy of the National Archives.

While it might seem as if nothing can stop the Trump bull market from heading even higher, one historical figure looms large. This $8.3 trillion warning suggests that Wall Street's historic bull market under President Trump is on thin ice.

Money market fund assets are soaring, and that's terrible news for stocks

Though several headwinds serve as a warning for investors, including record-high outstanding margin debt and nosebleed stock valuations, the total financial assets held in money market funds could be the biggest red flag of them all.

Money market funds are a type of mutual fund that invests in extremely safe, high-quality assets, such as short-term Treasury bills and certificates of deposit. Investors putting their money to work in money market funds typically want to protect their principal and generate reliable interest income.

When the Federal Reserve undertook an aggressive rate-hiking cycle between March 2022 and July 2023 to combat a rapid rise in inflation, fixed-income yields soared. This marked the ideal time for income investors to shift some of their assets into money market funds.

$8.3 Trillion is now sitting in money market funds, an all-time high 🚨 🤑 💰 pic.twitter.com/a63K7h0ell

— Barchart (@Barchart) August 5, 2026

But between September 2024 and December 2025, the central bank lowered the federal funds target rate six times, reducing yields on fixed-income securities and making money market funds less attractive. We would have expected to see capital flow out of money market funds as interest rates declined, but the opposite has been true.

The latest quarterly update from the Board of Governors of the Federal Reserve is that total financial assets held in money market funds reached a record high of $8.29 trillion in the first quarter. Even as yields have fallen, investors have been piling into money market funds like there's no tomorrow.

Ideally, we'd like to see this capital flowing back into the stock market -- but it's not, and that's quite telling.

The stock market entered 2026 at its second-priciest valuation spanning nearly 156 years. History tells us that premium valuations aren't sustainable over extended periods, which may have investors skittish about putting their capital to work in the high-flying Trump bull market.

Stock Market Shiller PE Ratio on the verge of taking out its Dot Com Bubble all-time high 🚨 🤯 👀 pic.twitter.com/CtCmSgWnLt

— Barchart (@Barchart) July 11, 2026

Furthermore, Wall Street's bull market under Trump has been powered by the artificial intelligence (AI) revolution. History has shown that, for decades, every game-changing innovation has endured an early-stage bubble-bursting event. Soaring assets in money market funds may signal that investors expect an AI bubble to form and burst.

To round things out, more than half a century of history shows that significant increases in assets held in money market funds have commonly been a precursor to economic and stock market downturns. Since the midpoint of 2022, total assets held in money market funds have soared 65%! Other instances in which money market fund assets soared include the lead-ups to the financial crisis and the COVID-19 crash.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Sandisk (NASDAQ:SNDK) earned $6.9 billion of net income in its latest quarter, largely because memory prices went on an extraordinary run. The market clearly doubts the run can last.

The growth stock still sits more than a quarter below its 52-week high. And the stock costs only about 8 times expected fiscal 2027 earnings. A price like that assumes much of today's profit won't survive the cycle.

The flash memory specialist's answer is written into contracts. It now has 10 long-term supply agreements with eight data center and edge customers, and they are expected to produce at least $93.9 billion of revenue over their lives -- assuming prices settle at their contractual floors. For scale, fiscal 2026 revenue, up 175% year over year, was $20.25 billion.

How much downside protection does a floor like that buy?

Image source: Getty Images.

A $93.9 billion minimum

The agreements (Sandisk calls them New Business Model agreements) commit the company to deliver, and its customers to buy, set volumes of flash memory over multiyear terms -- more than four years on a weighted-average basis, and up to five. Pricing combines fixed and variable elements, and the variable part is subject to floors and ceilings. The $93.9 billion is the minimum those terms produce if every variable price lands at its floor. It isn't an annual figure or a conventional backlog -- it's contracted revenue spread across the agreements' lives. The agreements also carry financial guarantees (customer cash deposits and other instruments totaling $16.5 billion) in case a buyer walks away. And on the company's August earnings call, chief financial officer Luis Visoso said Sandisk expects them to cover more than half of its bits (the volume of memory shipped) in fiscal 2027 (the fiscal year that began in July), and about two-thirds the following year.

Notably, the floor assumption cuts only one way. If market prices hold above the floors, revenue comes in higher, up to the contracts' ceilings.

The contracted book is still building, too. Remaining performance obligations (contracted product not yet delivered) went from $41.6 billion in early April to $59.8 billion by July 3. And two agreements signed after the fiscal year closed, with a combined contract value the annual report puts at $31.3 billion, aren't in that total.

How bad could the next bust be?

Sandisk's recent history shows what an unprotected downturn looks like. In the final quarter of fiscal 2025, the company generated just $1.9 billion of revenue, ran a 26.2% gross margin, and posted a small net loss. Four quarters later, revenue was $8.97 billion, gross margin was 84.6%, and net income came to $6.9 billion.

Most of that swing came from price, not volume. Management said higher pricing accounted for about two-thirds of the quarter's growth from the prior quarter. And its outlook asks for more of the same: fiscal first-quarter 2027 revenue of $10.3 billion to $10.8 billion, with non-GAAP gross margin expected to hold between 83% and 85%.

The floors are aimed at the reverse trip. In fiscal 2025, nothing stood between Sandisk's revenue and a falling spot price.

If the cycle turns now, more than half of this fiscal year's volumes can't reprice below their contractual minimums, whatever the spot market does. That, I'd argue, is the biggest change in Sandisk's story.

"We expect attractive margins even at floor pricing," Visoso said on the August call.

A price floor isn't a profit floor

However, it's worth noting what that promise covers. Attractive margins at the floor make a case for staying profitable -- not a case that an 84.6% gross margin survives a downturn. In fact, the multi-year model management presented at its August investor day assumes non-GAAP (adjusted) gross margin settles near 80% for fiscal 2028 through fiscal 2030. And management hasn't said how far below today's prices the floors sit.

The rest of the business has no floor at all. Nearly half of this year's bits still sell at whatever the market pays. And no downturn has tested the structure, or customers' willingness to keep paying above-market minimums through one.

Ultimately, the downside case shrinks, but it doesn't go away. A memory crash would still hit nearly half of Sandisk's volumes at full force, and it would still pull contracted pricing down toward the floors.

What it arguably can't do anymore is drag the company back to $1.9 billion quarters and a net loss, as long as customers honor their agreements.

At about 8 times expected fiscal 2027 earnings, I think the stock is priced for a steep decline in earnings, and the contracts make the harshest versions of that decline harder to reach. Still, I'd like to see one quarter where memory pricing falls and margins hold before treating the floors as proven. Until then, I'm not a buyer.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ:NVDA) can't build artificial intelligence (AI) hardware fast enough for its customers. But the chips it has already delivered aren't going anywhere.

Nvidia's data center business generated $47.5 billion of revenue in fiscal 2024. In fiscal 2025, that figure jumped 142% to $115.2 billion. And in fiscal 2026, it climbed another 68% to $193.7 billion (Nvidia's fiscal years end in late January). That adds up to about $309 billion of shipments across the last two of those years alone -- and nearly all of that hardware is likely still racked up and running.

How long it keeps running is something Nvidia's biggest customers estimate in their filings, and those estimates carry real money. When Meta Platforms (NASDAQ:META) raised its estimated useful life for most servers to 5.5 years in 2025, the change added $1.00 to its earnings per share for the year.

And the schedules raise an awkward question for Nvidia: What does demand look like in 2028, when the boom-era chips aren't yet due for retirement?

Image source: Getty Images.

Nvidia's buyers assume the chips last five or six years

According to its latest annual filing, Microsoft depreciates servers and network equipment over two to six years. Alphabet generally uses six years for servers and network equipment. And Meta's 5.5 years took effect at the start of 2025 and covers most of its servers and network assets. The change cut that year's depreciation expense by about $2.9 billion.

Amazon (NASDAQ:AMZN) went the other way. Its reasoning, I'd argue, is the most interesting part.

The company raised its server estimate from five years to six at the start of 2024. A year later, it reversed, cutting a subset of servers and networking equipment back to five. The shorter lives, Amazon said, are due to "the increased pace of technology development, particularly in the area of artificial intelligence and machine learning." The reversal added $1.4 billion to its 2025 depreciation and amortization expense.

What retires in 2028?

Not much of this hardware is due to come out of service in 2028. A machine bought in 2024 on a five-year clock retires in 2029 at the earliest. On a six-year clock, 2030.

In other words, nearly everything from the 2024 and 2025 spending waves should still be working in 2028. The demand Nvidia is counting on that year is almost entirely new capacity, not replacement.

Chief financial officer Colette Kress said on the company's late-August earnings call that Nvidia expects revenue to grow about 70% in fiscal 2028, which runs through late January 2028. She called that a supply constrained outlook.

Nvidia itself makes the case that the schedules are honest. On its earnings call last November, Kress said the A100 chips Nvidia shipped six years earlier were "still running at full utilization today," crediting its CUDA software.

That defense also describes the problem. A chip that stays productive is capacity Nvidia has already been paid for once -- and it competes with whatever the company wants to sell next.

Sure, the dollars can grow even if the units don't. On the August call, CEO Jensen Huang said each new generation carries more revenue per gigawatt of data center capacity (about $18 billion for Hopper, about $40 billion for the new Vera Rubin platform). And "customers want to race to the next generation as fast as they can," he said.

A paid-off chip can work for cheap

The competition gets sharper once a server finishes its schedule. With no cost left on the books, its owner can rent it out at any price that covers electricity and space. Priced that way, a 2024-vintage chip is cheap competition for inference (the everyday work of running AI models), which arguably doesn't require the newest hardware.

Of course, that market is only starting to form (a marketplace for used Nvidia chips opened this summer). And Nvidia's results suggest why. Kress said in August that Nvidia's computing capacity is fully utilized across every cloud it serves. Supply should remain a bottleneck at least through the end of fiscal 2028. Nobody sells a machine that's earning rent.

Ultimately, the disclosures themselves are worth watching. Amazon's cut says AI hardware ages out faster than planned, which would pull replacement demand forward. Meta's extension says the fleet lasts, leaving 2028 resting that much more on new construction.

As for the stock, shares trade around $230 as of this writing, at about 29 times earnings. Given the growth Nvidia has already guided for, that price strikes me as fair, and I'd still buy shares here.

But the next time the cloud companies change those useful-life estimates, the direction will matter. If they extend again, the chips Nvidia already sold are lasting longer -- and some of the demand investors expect in 2028 may take longer to show up.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

There are many older Americans today who are struggling to get by on their Social Security benefits.

Granted, those benefits were never meant to sustain retirees without additional income. But the reality is that plenty of people struggle to save for retirement. And in a situation like that, Social Security benefits become a lifeline, as do the annual cost-of-living adjustments (COLAs) those checks are eligible for every year.

Image source: Getty Images.

At this point, many seniors are eager to know what the 2027 COLA will amount to. And they won't have to wait all that much longer, since an official announcement should arrive in mid-October. But later this week, seniors on Social Security should get a key clue about their upcoming COLA they won't want to miss.

A big piece of data should soon arrive

Social Security COLAs are based on third quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). We already have numbers for July, but August's reading is scheduled to be released on Sept. 11.

Once that data comes out, we can expect experts to update their Social Security COLA forecasts accordingly, or confirm whether their current projections remain valid. As of now, the nonpartisan Senior Citizens League, an advocacy group, expects 2027's Social Security COLA to be 3.6%, while independent analyst Mary Johnson is calling for a 3.4% boost.

Have realistic expectations

If you're on Social Security, you may be eager to find out what your 2027 raise will look like. But one thing you must realize is that your upcoming COLA probably won't improve your financial situation all that much, even if that raise is fairly generous.

Any time there's a larger COLA than average, it comes at the cost of higher inflation. So what you gain in the form of a more significant boost to your Social Security checks, you lose in the form of more expensive groceries, gas, and other essentials.

This doesn't mean that the number isn't important. But if you're struggling to cover your costs across the board, don't assume that a large COLA in 2027 will make your expenses easier to manage. You may want to take other steps to improve your situation, like reducing expenses to the most reasonable extent possible or pursuing some type of part-time work arrangement.

If you manage to earn a few hundred dollars a month, those wages will most likely put more money in your pocket than the upcoming COLA by far, thereby actually helping you better keep up with your bills.

The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX) stock has climbed 18% over the last month, bringing welcome news for shareholders. Over the stock's short trading history, it's already been a wild ride, with shares trading as low as $104.83.

SpaceX stock did a lot of work to get back above its initial public offering pricing of $135, and according to forecasts, that's just the start of where it could be heading by September 2027.

Image source: Getty Images.

What a $10,000 investment today could be worth by next year

Based on the Sept. 4 closing price of $147.95, purchasing $10,000 worth of SpaceX stock would yield a little more than 67 shares through fractional investing.

For where analysts think the stock price could go next, of the 41 who cover the stock, the median price target over the next 12 months for SpaceX is $216, according to CNN. If SpaceX hit that price, that would turn a $10,000 investment at the Sept. 4 closing price of $147.95 into approximately $14,599.

For a broader range of scenarios, we can also estimate the potential value of a $10,000 investment in SpaceX by looking at the lowest price target. I won't go over the highest price target, $800, which seems more of a long-term possibility over the next several years than something feasible in the next 12 months.

The lowest price target from that group of analysts is $75. If the SpaceX stock price were to sink that low, that would turn a $10,000 investment into a loss of approximately $5,069.

There's no guarantee that SpaceX will reach any of those prices. Rather, price targets offer a mental model investors can use to gauge sentiment around the stock and develop a risk-to-reward framework to assess whether the stock is a potential portfolio fit.

Investment considerations

In the near term, SpaceX will remain unprofitable. While its 2026 second-quarter earnings report showed its net loss narrowed from $1 billion the year before to $541 million, it's still a loss.

That said, this still could be a stock worth considering adding to a portfolio for more aggressive investors. The upside potential with SpaceX lies in its ability to lead the charge in the next wave of artificial intelligence (AI) infrastructure, with SpaceX forecasting a $26.5 trillion total addressable market (TAM).

It's showing early signs of what it can do through its ground-based data centers, striking deals with both Alphabet and Anthropic to rent out compute capacity. Together, those two contracts could generate $26 billion in annual revenue for SpaceX. As a reference point, SpaceX generated $18.7 billion in revenue for all of 2025.

But that could just be an early preview of what to expect from its data-center deals, as SpaceX plans to launch over 1 million satellites to serve as orbital data centers, with launches expected to begin in 2028. Over time, if SpaceX executes on that AI infrastructure build-out and captures as much of that $26.5 trillion TAM as is possible, it could make the $800 price target mentioned earlier much more realistic to reach over the long term.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

With a start date of Oct. 12, 2022, the current bull market is now nearly four years old. And by some measures, that's a potential problem. See, the S&P 500's (SNPINDEX: ^GSPC) average bull market only lasts 2.7 years.

That's the number from mutual fund company Hartford, anyway, based on the 27 bull markets since 1928. Since 1949, Fisher Investments notes the typical (and more recent) bull market lasts just over five years, which jibes with figures from brokerage firm Charles Schwab. Raymond James (NYSE: RJF) puts the number at 51 months, or four years and three months.

In other words, most of the statistics say there's probably at least a little more life left ahead for this one.

Just don't get too fixated on the typical bull market's time frame.

It's not a time-based matter

Those figures are averages across all bull markets that start at different times. In all of these cases, however, the length of the S&P 500's underlying bull markets still varied widely. The one that began shortly after the onset of the COVID-19 pandemic only lasted less than two years, for instance. The one stemming from the subprime mortgage meltdown back in 2008 persisted for nearly 11 years. Before that, the recovery from the dot-com collapse of 2000 lasted a predictable five years. Anything's possible.

Image source: Getty Images.

No two bull markets are the same. Their economic underpinnings are always different and always changing. These changes aren't exactly predictable either. Neither is the response of investors nor that of policymakers to them.

Your best bet, therefore, is not falling into the trap of expecting the S&P 500's cyclical ebbs and flows to adhere to any particular time frame. It's not that you can't or shouldn't look to the future for warning signs. It's just that you want to make sure you're seeing those red flags regardless of what the calendar suggests.

To this end (and in answer to the titular question), no, there's no need for investors to be nervous. Just be alert.

Charles Schwab is an advertising partner of Motley Fool Money. James Brumley has positions in Raymond James Financial. The Motley Fool recommends Charles Schwab and recommends the following options: short September 2026 $95 calls on Charles Schwab. The Motley Fool has a disclosure policy.

Brett Tighe, Chief Financial Officer of Okta, Inc. (NASDAQ:OKTA), sold 80,000 shares of Class A Common Stock on September 2, 2026, according to a recent SEC Form 4 filing.

Transaction summary

Transaction value based on SEC Form 4 weighted average sale price ($160.97); post-transaction value based on September 02, 2026 market close ($163.15).

Key questions

• What prompted this disposition of Class A Common Stock?
  The sale was conducted pursuant to a Rule 10b5-1 trading plan established by Brett Tighe on April 8, 2026. The plan allows corporate insiders to schedule share sales in advance to satisfy liquidity needs while maintaining compliance with insider trading laws.
• How has the stock performed leading up to this filing?
  The shares were sold at a weighted average price of $160.97, following a period where Okta generated an 82% return over the 12 months ending on the September 2, 2026 transaction date.
• What is the status of the executive's remaining equity position?
  After this transaction, Brett Tighe continues to hold 82,046 shares directly and 7,693 shares indirectly through a trust, and the filing also reports 50,808 direct derivative securities and 27,795 indirect derivative securities.
• How does this disposition affect the insider's ownership percentage?
  The Chief Financial Officer now maintains a direct and indirect ownership interest of 0.0540% in the company.

Company Overview

Company Snapshot

• Okta delivers comprehensive identity management solutions through its flagship Okta Identity Cloud platform, which includes integrated products such as authentication services, generating revenue primarily through subscription-based licensing and professional services.
• The company operates a cloud-based software-as-a-service (SaaS) business model, monetizing its identity infrastructure platform through recurring subscription fees from enterprise and mid-market customers seeking secure access management solutions.
• Okta serves a diverse customer base spanning large corporations, small and medium-sized businesses, educational institutions, charitable organizations, and governmental bodies across both domestic and international markets.

Okta, Inc. is a leading provider of identity and access management solutions with trailing 12-month revenue of $3.1 billion, reflecting strong demand for cloud-based security infrastructure. The company's Okta Identity Cloud platform represents a comprehensive, integrated approach to identity management, positioning the organization as a critical infrastructure provider for enterprises navigating digital transformation and heightened security requirements.

With a global customer base, Okta has established itself as a market leader in the identity management sector, benefiting from secular trends toward cloud adoption and the increasing criticality of identity security in enterprise IT environments.

What this transaction means for investors

CFO Brett Tighe's September 2 sale of Okta stock for a weighted average price of $160.97 took place just days after shares reached a 52-week high of $174.85 on Aug. 27. The timing was fortuitous, since Tighe's disposition was a non-discretionary transaction executed as part of a pre-arranged Rule 10b5-1 plan.

While the disposal represented a significant 47% of his equity stake, it involved the conversion of 41,251 shares of Class B Common Stock into Class A and immediate sale of those shares. This action is a common approach taken by executives as part of a structured liquidity strategy, since they hold so many shares.

In fact, post-transaction, Tighe retained nearly 80,000 direct and indirect derivative securities in addition to 82,046 directly held Class A shares and 7,693 indirectly held Class A shares in a trust. Combined, this is a substantial equity position, although future sales of this size could begin to raise investor concern.

Okta stock is up thanks to strong business performance. The company exited its fiscal second quarter, ended July 31, with $805 million in sales, representing 11% year-over-year growth.

Robert Izquierdo has positions in Okta. The Motley Fool has positions in and recommends Okta. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ:NVDA) announced on September 3 that it has agreed to acquire Hugging Face, which runs one of the most widely used platforms for sharing artificial intelligence (AI) models. The total deal value is about $12.9 billion.

Nvidia expects the deal to close in the first half of 2027. And the company says Hugging Face will stay an open platform for the whole AI ecosystem, with Nvidia compute never required to build on it.

That price invites a comparison. The largest acquisition Nvidia has ever closed is Mellanox, the data center networking specialist it agreed to buy for about $6.9 billion in 2019. Hugging Face will cost nearly twice as much.

Image source: Nvidia.

What $6.9 billion bought

Nvidia agreed on March 11, 2019, to pay $125 per share in cash for Mellanox, about $6.9 billion in enterprise value. The deal closed more than a year later, on April 27, 2020, at a transaction value of $7 billion.

Mellanox was a substantial business. In 2019, its last full year as a stand-alone company, it generated $1.33 billion in revenue, up 22% year over year, and $205 million in net income, up 53%. The price came to about five times Mellanox's 2019 sales, and about 34 times its earnings.

"With Mellanox, the new NVIDIA has end-to-end technologies from AI computing to networking," CEO Jensen Huang said when the deal closed.

Networking became a $31 billion business

Nvidia doesn't report Mellanox's results separately. But its annual filings disclose data center networking revenue, the line where the acquisition landed. Networking revenue was $8.6 billion in fiscal 2024, $13 billion in fiscal 2025, and $31.4 billion in fiscal 2026, the year that ended this past January -- growth that accelerated from 51% to 142%.

That line isn't all Mellanox, though. Nvidia says fiscal 2026's networking growth was driven by the ramp of NVLink, an interconnect Nvidia announced back in 2014, along with the Ethernet and InfiniBand platforms that came with the deal.

And the disclosure has since gone quiet. Nvidia's commentary on its fiscal second quarter of 2027 (the period ended July 26, 2026) splits data center revenue by customer type and doesn't break out networking at all.

Even so, the business Nvidia bought for $7 billion anchors a product line that generated $31.4 billion in revenue in a single fiscal year -- more than four times the purchase price. However the credit gets divided, I think few big acquisitions anywhere have turned out better.

What does $12.9 billion buy?

Nvidia's announcement puts the total deal value at $12.9 billion, including an equity-based retention program of up to $1 billion for Hugging Face employees who join the company. The platform's scale helps explain the interest. More than 18 million developers, researchers, and creators use Hugging Face to share more than 3 million models and 500,000 datasets.

Hugging Face, founded in 2016, already counts Nvidia among its investors and was valued at $4.5 billion in a funding round three years ago. As for what the company brings in today: The Information reported in August that annualized revenue had climbed 50% in two months, to more than $150 million.

Set that figure against the total deal value, and Nvidia is paying around 86 times reported annualized revenue. It paid about five times sales for Mellanox.

What Nvidia has to believe, I'd argue, is that Hugging Face can pay off the way Mellanox did -- indirectly. The Mellanox deal worked because networking became an integral part of the AI data center systems Nvidia sells, not because Mellanox kept growing as a business apart.

The equivalent belief is that owning the platform where developers pick their models keeps them, and their compute budgets, on Nvidia's hardware and software. If a return comes, it comes through chip and system sales, not Hugging Face's revenue line.

One more difference favors the deal. Nvidia had about $11.7 billion in annual revenue when it announced the Mellanox acquisition, so that price equaled nearly 60% of a year's sales. The $12.9 billion for Hugging Face is small for today's Nvidia, which generated $96.2 billion in revenue and nearly $60 billion in net income in the fiscal second quarter alone. (Nvidia's December 2025 Groq deal was bigger, reportedly valued at about $20 billion, but that was a technology license and hiring, not a purchase of the company.)

Ultimately, the Mellanox price ended up looking like a bargain. But the payoff ran through Nvidia's own product line, and at around 86 times revenue, Hugging Face will need the same indirect kind of payoff.

I wouldn't buy or sell the stock over this deal. With shares around $230 as of this writing, a check this size likely won't decide where the stock goes. And I think management has earned some patience on deals like this one.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

In the second quarter of 2025, data center products generated about 42% of Advanced Micro Devices' (NASDAQ:AMD) revenue. Last quarter, they generated 58% -- $6.7 billion of the chipmaker's record $11.5 billion total.

Behind that shift is a simple growth gap. In the second quarter, data center revenue climbed 107% from a year earlier. Everything else AMD sells (client processors, gaming chips and embedded products) grew about 8% combined.

With a gap that wide, the mix shifts every quarter on its own.

My prediction: the segment passes 70% of AMD's revenue at some point in 2027, before the Helios rack ramp is finished. Here's the math, step by step, and what could break it.

Image source: AMD.

A widening spread

The second quarter's 50% companywide growth blended two very different businesses. Data center, home to EPYC server processors and the Instinct graphics processing units (GPUs) behind artificial intelligence (AI) computing, more than doubled over the year, from about $3.2 billion to $6.7 billion. The rest of the company combined for about $4.8 billion. Client revenue, at $3.1 billion, was up 23%, embedded grew 19%, and gaming fell 31%.

Third-quarter guidance widens the gap. Management's guide calls for revenue near $13 billion in the third quarter -- about 41% growth, down from the second quarter's 50%. But chief financial officer Jean Hu said the company expects data center sales to accelerate in the second half of the year. In other words, nearly every incremental dollar in that guide is a data center dollar.

If everything outside data center simply holds near $4.8 billion combined, data center lands around $8.2 billion in the third quarter. That would be about 63% of revenue, five percentage points of mix shift in one quarter.

What does it take to get to 70%?

For the segment to reach 70% of revenue, it has to grow to about 2.3 times the size of everything else AMD sells. Last quarter, it was about 1.4 times that size.

Run those two rates forward a year, with data center slowing from 107% to 90% and the rest still growing about 8%.

By the second quarter of 2027, the segment would be producing roughly $12.8 billion against about $5.2 billion for everything else. That comes to about 71% of revenue. And even a sharper slowdown to about 85% growth still gets there within a year.

Management is aiming higher than my scenario assumes. "Taken together, we now expect data center segment revenue to more than double year-over-year in 2027," CEO Lisa Su said on the company's second-quarter earnings call.

Helios, AMD's rack-scale AI system built on MI400 series chips, is in production, and Su said initial shipments are on track to begin late this quarter, with the ramp building through the fourth quarter and into 2027.

OpenAI has agreed to deploy 6 gigawatts of AMD GPUs, with the first gigawatt of MI450 series chips set to begin deploying later this year. Meta Platforms signed its own 6-gigawatt agreement, with first shipments on the same timeline. And Anthropic plans up to 2 gigawatts, with the first gigawatt beginning in the first half of 2027.

AMD's other businesses could get in the way

The likeliest way this prediction fails isn't a data center stumble -- it's strength everywhere else.

Client revenue grew 23% in the latest quarter, a healthy rate hidden inside that combined 8% figure because gaming fell 31% alongside it. And at about $780 million a quarter, gaming may soon be too small for its declines to keep masking that.

A PC upgrade cycle could push client growth toward 30% while gaming stops falling, lifting the rest of the company to about 20% growth. Hold data center at 90%, and the segment sits near 69% of revenue by mid-2027, just under the line.

Of course, that outcome would be good for AMD. It would likely push the crossover out a quarter or two, still inside 2027.

But a Helios stumble is what breaks the prediction outright. If shipments slip and data center growth gets cut in half to about 50%, the segment could sit around 66% of revenue in mid-2027, and I think 70% waits until 2028.

Ultimately, the spread between 107% and 8% is wide enough that the prediction doesn't need a best-case 2027. It survives a real data center slowdown, and a client revival mostly delays it.

Investors, I'd argue, are already pricing AMD like a data center company. The stock trades at about $474 as of this writing, or around 30 times what AMD is expected to earn in 2027.

The valuation looks reasonable next to 41% guided revenue growth, but a smooth Helios ramp is already baked into the price.

I expect the crossover to come around the middle of 2027, give or take a quarter.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Meta Platforms. The Motley Fool has a disclosure policy.

Constellation Energy (NASDAQ: CEG) operates the largest U.S. nuclear power portfolio, with over 22 gigawatts of capacity at the end of fiscal 2025. Although Vistra's (NYSE: VST) nuclear portfolio is smaller, with 6,448 megawatts of capacity, its contracted opportunity is substantial. Both companies have been signing long-term deals with technology companies that need reliable electricity for data centers.

Image source: Getty Images

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

But the better stock is not simply the company with more nuclear capacity. Constellation Energy and Vistra trade at roughly 22.4 times and 14.4 times forward one-year earnings, respectively. The significant valuation gap is an important factor in deciding which stock offers the better opportunity today.

Constellation has significant revenue visibility

Constellation Energy has signed a 20-year agreement to supply Microsoft with power from the planned restart of the 835-megawatt Crane Clean Energy Center. The company has also signed a 20-year agreement to supply Meta Platforms with 1,121 megawatts of nuclear power from the Clinton Clean Energy Center. Constellation Energy also signed another 920 megawatts of long-term power purchase agreements for nuclear generation in the second quarter. (ending June 30, 2026).

Management expects base earnings per share to compound at 20% or more annually from 2026 through 2029. However, base earnings represent only about 60% to 70% of total adjusted operating earnings. So investors should not assume total adjusted operating earnings per share (EPS) will grow at the same rate.

Vistra also looks attractive

Vistra's 20-year agreements with Meta Platforms cover 2,609 megawatts, including 433 megawatts of new capacity expected from upgrades at existing plants. Amazon's AWS has also signed a 20-year agreement for up to 1,200 megawatts of power from Vistra's Comanche Peak nuclear plant.

Vistra sees a 2027 adjusted EBITDA opportunity of $7.4 billion to $7.8 billion from its ongoing operations, excluding potential benefits from the pending Cogentrix Energy acquisition and its agreements with Meta Platforms. The company has also reduced its share count by roughly 30% since November 2021, which has helped boost earnings per share even without relying entirely on faster business growth.

Hence, while Constellation Energy deserves a premium, Vistra offers the stronger risk-reward proposition today.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Constellation Energy, Meta Platforms, Microsoft, and Vistra. The Motley Fool has a disclosure policy.

The Vanguard Information Technology Index Fund ETF (NYSEMKT: VGT) has crushed the S&P 500 this year, with a 27% return. Some investors think they missed out on the rally when a stock or ETF gains momentum, but that may not be the case for this tech ETF. A closer look at the fund's top holdings indicates that there is more to the strong year-to-date performance than investors may realize.

Image source: Getty Images.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

This tech ETF offers significant exposure to the AI trade

The Vanguard Information Technology Index Fund ETF is filled with chipmakers. Nvidia (NASDAQ: NVDA) is the largest position, making up 17% of the fund's total assets. Broadcom (NASDAQ: AVGO), Micron (NASDAQ: MU), and Advanced Micro Devices (NASDAQ: AMD) hold the top four to six positions in the fund and account for a combined 11% of total assets.

Hyperscalers need these chips for their artificial intelligence infrastructure, and as long as cloud platforms and other businesses perform well thanks to AI, those investments will continue. Nvidia and Broadcom both gave multi-year guidance that implies AI revenue will continue to compound.

The largest positions in the portfolio look poised to deliver exceptional fundamental growth amid the AI boom. It's this type of growth that could help the Vanguard Information Technology Index Fund ETF extend its gains.

It's all tech

The tech sector has historically been one of the best ways to beat the S&P 500 over the long run, and this ETF serves as an excellent example. The tech-focused Vanguard fund has an annualized return of 24.4% over the past decade.

Looking deeper into the fund reveals a major allocation to semiconductors and tech hardware, which together account for more than 60% of total assets, including semiconductor equipment.

It still has some exposure to other tech opportunities, such as e-commerce and online advertising. While these types of investments could beat the S&P 500, artificial intelligence is the hottest opportunity right now.

Grand View Research projects a 30.6% compound annual growth rate (CAGR) for the artificial intelligence industry through 2033. Some companies will grow faster than others as the rising tide of AI lifts many businesses, but chipmakers have been the market leaders. Nvidia, Micron, Broadcom, and Advanced Micro Devices are all posting revenue growth rates far more impressive than the average S&P 500 company, and multi-year deals suggest that it will continue.

The Vanguard Information Technology Index Fund ETF has a long history of beating the market and charges only a 0.09% expense ratio. It doesn't cost much to get a well-diversified portfolio of tech companies that should benefit from continued AI demand.

Marc Guberti has positions in Broadcom. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.

Shares of Tesla (NASDAQ:TSLA) fell 5.92% on Friday, after the company's invite-only Cybercab launch event left investors underwhelmed and federal safety regulators opened an audit query into the new robotaxi. Cathie Wood's ARK Innovation ETF (NYSEMKT:ARKK) slipped 1.06% the same day.

Those two moves are more connected than they look. Not only is Tesla the fund's biggest position, but the second-biggest position, SpaceX (NASDAQ:SPCX), answers to the same CEO. SpaceX fell 1.2% on Friday, too.

Together, the two Elon Musk companies make up about 16% of a fund with 47 holdings.

Image source: Getty Images.

Two stocks, one CEO

ARK publishes the fund's holdings daily, and the file dated Friday, Sept. 4, shows how top-heavy the ARK Innovation ETF is. Tesla sits at 9.62% of assets, and SpaceX sits at 6.28% -- about 16% combined. Stablecoin issuer Circle Internet Group is the No. 3 position at 6.06%, just behind SpaceX. And the top 10 positions account for about half of the fund's $6.6 billion in assets.

Of course, the fund is concentrated at the top generally, not just in Musk's companies. The Musk pairing is different, though. Two positions run by the same person can move on the same news, and owning both doesn't spread the risk the way owning two unrelated companies would.

Zoom out, and the concentration hasn't been an obvious edge lately, either. The fund gained about 15% over the past year, a stretch in which the S&P 500 (SNPINDEX:^GSPC) rose about 19%.

How much of Friday came from Tesla?

Thursday was supposed to be a milestone for Tesla. The company put its two-seat Cybercab robotaxi into service in Austin, Texas.

But the launch event was invite-only, wasn't streamed, and CEO Elon Musk didn't appear. The event also gave no details on pricing, production pace, or deployment plans.

Regulators moved the same day, too. The National Highway Traffic Safety Administration opened an audit query into Tesla's self-certification of the Cybercab (a vehicle with no steering wheel or pedals) as compliant with federal safety standards.

Tesla's stock had climbed 5.4% on Thursday ahead of the event. By Friday's close, it was down 5.92% to about $354, leaving it about 29% below its 52-week high.

For ARK Innovation, the effect was mostly a matter of weight. A position that makes up 9.62% of assets and falls 5.92% takes about 0.6 of a percentage point off the fund by itself. The fund fell 1.06% on Friday. In other words, more than half of the day's decline came from one stock.

And that stock isn't cheap. Tesla trades at about 155 times the earnings it's expected to produce next year, a price that I'd argue assumes products like the Cybercab ramp quickly and smoothly.

SpaceX is even more expensive

The fund's other Musk position has been a public company for less than three months. SpaceX, the satellite internet and rocket company, went public on June 12 at $135 per share in the largest initial public offering on record.

To be fair, the business is growing impressively. Second-quarter revenue came in at $7.8 billion, up 92% year over year from $4.1 billion. The connectivity segment, built around Starlink's satellite internet service, produced $4.3 billion of that, more than the company's other two segments combined. And the growth is accelerating: revenue rose about 15% year over year in the first quarter before the second quarter's surge.

The company isn't close to profitable, though. SpaceX lost $541 million in the second quarter, an improvement from a $1 billion loss a year earlier. But over the first six months of 2026, its net loss widened to $4.8 billion from $1.5 billion.

Shares trade around $148 as of this writing, modestly above their offering price. That puts SpaceX's market value near $2 trillion -- about 64 times sales, measuring a full year of revenue at the second quarter's pace.

Ultimately, a fund with 47 holdings sounds diversified, and in most respects this one is. At the very top, it isn't. About 16% of the fund rides on one CEO's two companies, and both are arguably among the most expensive stocks in the market.

For investors who own ARK Innovation as a spread-out bet on innovation, the pairing at the top may deserve more attention than the fund's 47 holdings suggest.

Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

Mark Streams, Executive Vice Chairman of the Board of Directors and the Chief Legal Officer at StubHub Holdings, Inc. (NYSE:STUB), sold ~166,000 shares of Class A Common Stock for ~$1.1 million on September 2 and 3, 2026 according to a recent SEC Form 4 filing.

Transaction summary

Transaction value based on SEC Form 4 weighted average sale price ($6.36); post-transaction value based on September 03, 2026 market close ($6.53).

Key questions

• What was the scale of the disposition relative to the insider's total equity?
  The sale of ~166,000 shares represented 12% of the Class A Common Stock held directly by Mark Streams before the transaction.
• At what price levels were the shares executed during this period?
  Execution occurred across multiple transactions at weighted average prices ranging from $6.20 to $6.4350 per share.
• What is the current market value of the remaining direct equity interest?
  The insider retains direct ownership of ~1.2 million shares, which carries a market value of $8.01 million based on the September 3, 2026 valuation price of $6.53.
• How does the insider's residual ownership compare to the total shares outstanding?
  The remaining direct stake represents an ownership interest of 0.35% in the company.

Company Overview

Company Snapshot

• StubHub operates a global ticketing marketplace that facilitates the buying and selling of live event tickets through its StubHub and viagogo brand platforms, generating revenue from transaction fees on ticket sales across concerts, sports, theater, and other live experiences.
• The company operates a commission-based business model, capturing value as an intermediary between ticket buyers and sellers on its digital marketplace, with revenue derived primarily from transaction fees on each ticket sale completed on its platforms.
• StubHub serves individual consumers seeking to purchase or resell tickets to live events, as well as event organizers and venues that utilize the platform to reach secondary market buyers, with a customer base spanning multiple geographies and event categories.

StubHub Holdings operates the world's largest peer-to-peer ticketing marketplace, facilitating billions of dollars in annual ticket transactions across a global customer base of hundreds of millions of users.

The company leverages its dual-brand strategy -- StubHub in North America and viagogo internationally -- to maintain market leadership in the secondary ticket resale market. Despite significant revenue generation, the company is currently navigating profitability challenges as it invests in platform expansion and market penetration.

What this transaction means for investors

StubHub's Executive Vice Chairman and Chief Legal Officer Mark Streams sold a substantial 12% of his directly held company shares on Sept. 2 and Sept. 3. This was a discretionary transaction at a weighted average price of $6.36, which is not far from the stock's 52-week low of $5.74, and well below the initial public offering price of $23.50 per share.

Although he sold a large percentage of his holdings, Streams still retains 1.2 million directly held shares. This significant equity position ensures his continued alignment with shareholder interests. However, a discretionary sale of this size does not instill investor confidence.

StubHub experienced strong sales in the second quarter thanks to the World Cup. It reported record revenue of $573.1 million, which represents excellent 33% year-over-year growth. That said, the stock remained down as costs also increased, resulting in a disappointing net loss attributable to common shareholders of $40,000.

Consequently, Wall Street analysts downgraded the stock, noting a slowdown in StubHub's gross merchandise sales in the second half of 2026, which is at odds with the growth seen by competitors.

Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

After nearly four years of steadily amassing a cash balance of $397 billion, Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) is finally putting a measurable amount of that money back to work.

Oh, most of it still remains on the sidelines, undeployed. Specifically, as of the end of the conglomerate's second fiscal quarter, which ended in June, it still had nearly $366 billion in liquidity. That's a reduction of $31 billion in just three months' time, or less than one-tenth of its cash pile.

Still, it's a start.

So where did all that money go? It's not too tough to figure out.

Image source: Getty Images.

Where the money went

The biggest chunk of that $31 billion went toward the purchase of more shares of technology giant Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Berkshire ended Q1 with 54.2 million "A" shares of the company (worth roughly $15.6 billion at the time), plus a handful of "C" shares. Now it owns a bunch more of both, with a collective stake worth nearly $36 billion. That makes Alphabet Berkshire Hathaway's third-biggest holding, right behind American Express.

That's certainly not the only addition Berkshire's current CEO Greg Abel -- with some guidance from Warren Buffett, of course -- made to the company's equity portfolio during the second quarter, though. Although it already owned stakes in both, the company scooped up another 17.5 million shares of Delta Air Lines (NYSE: DAL) to bring its count to 57.3 million, and more than doubled its position in department store chain Macy's (NYSE: M), adding another 4.3 million shares. Those trades would have cost on the order of $1.6 billion and $100 million, respectively.

Expanded positions in homebuilder Lennar (NYSE: LEN) (NYSE: LENB) and The New York Times Company (NYSE: NYT) would have also used up some of Berkshire's cash, although not nearly as much as the $17 billion it shelled out to expand its stake in Alphabet.

Perhaps Abel's most noteworthy use of Berkshire Hathaway's idle cash during Q2, however, wasn't a new pick or adding to an existing one. It's the $4.5 billion used to repurchase outstanding shares of Berkshire itself. That's a dramatic increase from the $235 million spent on the company's own stock in Q1, snapping a six-quarter hiatus in share buybacks.

It's also worth noting that Berkshire Hathaway sold on the order of $3.7 billion in equity holdings during the three months in question, bolstering the conglomerate's quarter-ending cash balance. The remainder of any difference between the sum total of these purchases minus the proceeds of these sales reflects capital spending or net costs incurred by Berkshire's privately owned businesses, such as GEICO Insurance, Clayton Homes, Pilot Travel Centers, and Dairy Queen, just to name a few.

Picky about picks, but also patient

The allocation of this cash deployment is interesting, to be sure. Perhaps more interesting, however, is the fact that Abel is finally doing something with all of that idle capital. Yet, Berkshire's CEO doesn't appear to be in a rush to put it all to work at once. This patience is just as impressive as the conglomerate's stock's long-term price performance.

American Express is an advertising partner of Motley Fool Money. James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, American Express, Berkshire Hathaway, Lennar, and The New York Times Co. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.

William J. Colombo, a Director at Dick's Sporting Goods (NYSE:DKS), purchased 913 shares of common stock on Sept. 1, 2026, as disclosed in a recent SEC Form 4 filing.

Transaction summary

Transaction value based on SEC Form 4 weighted average purchase price ($133.19); post-transaction value based on Sept. 1, 2026, market close ($132.95).

Key questions

• How does this purchase alter the insider's total equity position?
  The acquisition of 913 shares increased total beneficial ownership to 181,838 shares, with the position primarily comprising 181,000 shares held indirectly through a trust and a minor direct holding of 838 shares.
• What is the current market valuation of the total holdings?
  Based on the Sept. 1, 2026, market close of $132.95, the aggregate direct and indirect equity stake is valued at approximately $24.2 million.
• What is the context of the transaction price relative to recent stock performance?
  The shares were acquired at a weighted-average price of $133.19 per share, following a period in which the company saw a 38% decrease in its one-year total return as of Sept. 1, 2026.

Company Overview

Company Snapshot

• Dick's Sporting Goods operates as a comprehensive omni-channel sporting goods retailer, generating revenue through the sale of hardlines, including sporting equipment, fitness equipment, golf equipment, and fishing gear, as well as athletic apparel, footwear, and accessories across its retail network.
• The company operates an integrated retail model combining physical store locations with digital commerce capabilities, enabling customers to shop across multiple channels while maintaining inventory efficiency and fulfillment flexibility.
• Dick's Sporting Goods serves a broad consumer base of athletic enthusiasts, fitness-focused individuals, and sports participants across the United States, positioning itself as a destination retailer for both casual and serious athletes.

Dick's Sporting Goods is a leading omni-channel sporting goods retailer with a substantial market presence across the United States. The company generates approximately $21.1 billion in TTM revenue, demonstrating significant scale within the specialty retail sector. As a diversified sporting goods platform, Dick's maintains competitive advantages through its integrated retail network, comprehensive product assortment spanning equipment and apparel categories, and omni-channel capabilities that address evolving consumer shopping preferences.

What this transaction means for investors

Shareholders of Dick's Sportings Goods have had a rough go of it over thus far in 2026, with the stock price dropping nearly 30%. In comparison, the S&P 500 is up 12.7% over the same period. The struggles faced by the retailer were highlighted in its recent 2026 second-quarter earnings report. In that report, Dick's Sporting Goods reported that Foot Locker, which it acquired in September 2025, saw comparable sales decline by 3.6%. The Foot Locker business, which some were skeptical Dick's Sporting Goods could turn around, appears to be weighing on the overall business, as Dick's Sporting Goods lowered its overall net sales outlook for 2026.

Given the stock's negative price performance and the negative sentiment around the stock, Colombo's purchase is likely welcome news for shareholders. There are plenty of reasons to sell a stock, but typically, an insider buys shares only because they believe the stock price will eventually rise. Purchasing 913 shares indirectly is still a relatively small stake compared to Colombo's overall holdings, but it is at least a signal of confidence. And the bigger picture is that the insider's total holdings are valued at $24.2 million, indicating continued alignment with the company's future success.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Shares of UiPath (NYSE: PATH) sank despite the company reporting solid fiscal second-quarter results and raising its full-year guidance. The stock is now down on the year, as of this writing.

UiPath began as a robotic process automation (RPA) company that lets customers use software bots to perform repetitive, rule-based tasks; however, it has been in the middle of transforming itself in the age of artificial intelligence (AI). Its goal now is to be an orchestration platform that can combine AI with deterministic automation.

Let's dig into the company's quarterly results and prospects to see if this dip is a buying opportunity.

Moving in the right direction

UiPath said its platform that can orchestrate both AI agents and bots was beginning to resonate with customers as it can give them better returns on their investments and that its strong roots in governance and reliability were a competitive advantage. It also believes that being AI model agnostic is an important differentiator. Its AI momentum could be seen in the quarter with 18 of its 20 largest deals including an AI component.

The company has been working to strengthen its go-to-market strategy and said increased deal sizes and expanded customer engagement were evidence this was starting to pay off. However, it noted that customer education was still important, as it looks to bestow the benefits of how combining AI with deterministic automation can help enterprises. The company is also considering offering outcome-based pricing models to increase customer value and adoption. Finally, it continues to add prebuilt vertical and outcome-oriented solutions to help drive growth and be a gateway for its entire solution.

For its fiscal Q2, revenue rose 13% year over year to $410 million, cruising past guidance for revenue of between $395 to $400 million. Its annualized recurring revenue (ARR) rose by 12% year over year to $1.94 billion. Meanwhile, it added $37 million in new ARR in the quarter, up 19% year over year. UiPath's ARR is made up of its annualized invoiced amounts from subscription licenses and maintenance and support obligations, while it excludes invoiced amounts related to perpetual licenses or professional services. The metric is similar to bookings.

Dollar-based net retention came in at 109%, showing that the company is seeing solid growth within its existing customer base. It also had 97% gross retention.

UIPath ended the quarter with 10,350 customers, which was down from 10,550 at the end of Q1 as it continues to see attrition among smaller customers. Customers with $30,000 or more in ARR increased by 6% year over year, and customers with $100,000 or more in ARR increased 10%. Meanwhile, customers with $1 million or more in ARR jumped 21% to 387.

Adjusted earnings per share (EPS) was steady at $0.15. The company generated $31 million in operating cash flow and free cash flow. It ended the quarter with $1.41 billion in cash and marketable securities and no debt.

Looking ahead, UIPath forecast Q3 revenue in the range of $440 million to $445 million, representing growth of 8% at the midpoint. It guided for ARR between $1.992 billion and $1.997 billion.

For the full year, it raised its revenue guidance to a range of $1.789 billion to $1.794 billion from an earlier outlook of $1.776 billion to $1.781 billion. It now expects ARR of $2.065 billion to $2.070 billion versus between $2.058 billion and $2.063 billion previously.

Image source: The Motley Fool

Can the stock rebound?

UiPath continues to have a nice opportunity in front of it, and it appears to be seeing some green shoots from its efforts. However, for the stock to work, it does really need to see growth start to accelerate.

The stock remains relatively cheap, trading at a forward price-to-sales ratio of 4.4 times for a high gross margin, recurring business model. Take out its $1.4 billion in cash and marketable securities, and the stock trades at an enterprise-value -to-forward-sales ratio of just around 3.5.

Given its valuation, I think UiPath remains an interesting, speculative AI stock to own.

Geoffrey Seiler has positions in UiPath. The Motley Fool has positions in and recommends UiPath. The Motley Fool has a disclosure policy.

Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) is off to a strong start in its first year under CEO Greg Abel. Second-quarter operating earnings rose 16% from a year earlier. The stock, near $505 as of this writing, puts the company's market value at about $1.1 trillion.

Whether the next five years look as good is a harder call. Over a stretch that long, the stock should mostly track two numbers -- how fast operating earnings grow, and what multiple of those earnings investors will pay.

And both numbers hinge, arguably more than anything else, on what Abel does with the company's $365 billion of cash and U.S. Treasury bills.

Image source: Getty Images.

Strong growth, and a price to match

Operating earnings are Berkshire's preferred yardstick. The measure leaves out the stock portfolio's gains and losses, which swing reported net income from quarter to quarter and which the company says are usually meaningless in any given period.

On that measure, the company earned about $13 billion during the second quarter. First-half operating earnings totaled $24.3 billion, 17% more than a year earlier.

The growth is a rebound, not a continuation. Operating earnings slipped 6% in 2025, to $44.5 billion, dragged down by weaker insurance results.

This year, growth is broad-based outside insurance. BNSF, the energy business, and the manufacturing, service and retailing group all grew first-half earnings between about 10% and 15% year over year.

Add up the past four reported quarters, and Berkshire has earned about $48 billion of operating earnings, or about $22 for every Class B share. Against a $505 share price, that comes to about 23 times operating earnings -- a premium price, in my view. Investors are paying today for growth that hasn't happened yet.

Greg Abel has started spending the cash

Berkshire's cash and U.S. Treasury bills stood at about $365 billion at midyear, a little less than at the start of the year.

In January, the company closed its $9.4 billion purchase of the chemicals maker OxyChem. In late July, it paid about $6.8 billion in cash for homebuilder Taylor Morrison. And it repurchased about $4.5 billion of its own stock in the second quarter, after buying back almost none in the first. The buyback decision is Abel's now, made in consultation with chairman Warren Buffett.

Berkshire was a net buyer of stocks, too. The cost basis of Berkshire's equity portfolio rose about $21 billion during the first half.

Those uses of cash do different jobs for the five-year math. An acquisition adds operating earnings directly. Stock purchases mostly add just dividend income, since portfolio gains sit outside the operating measure. And buybacks shrink the share count, down about 0.5% through June, so each share gets a bigger piece of the earnings.

Meanwhile, the case for leaving the cash parked may get weaker. After all, Berkshire's insurance investment income fell about 8% in the first half, a decline the company attributed to lower short-term interest rates. The less Treasury bills pay, the more the five-year outcome depends on Abel finding better places for the money.

Where could the stock land?

Assume growth settles at 5% a year, slower than 2026 but better than 2025, and that investors put a lower valuation multiple on a slower Berkshire -- say, 18 times operating earnings. Per-share operating earnings would reach about $29 by mid-2031, and the stock would sit near $525. Five years of almost nothing.

The upside case leans on the cash. If acquisitions and buybacks help operating earnings compound at 10% a year (a pace the company has beaten so far in 2026), and the stock keeps a valuation near 22 times operating earnings, per-share earnings reach about $37. The stock lands a little above $800, about a 10% annual return.

The stock portfolio adds noise to every path. Berkshire's five largest holdings made up 66% of its $324 billion equity portfolio at midyear: Alphabet, American Express, Apple, Bank of America, and Coca-Cola. Of course, a rough stretch for even one or two of those positions could move what investors pay for the whole company. But the portfolio is only about 30% of Berkshire's market value, and its swings don't touch operating earnings at all.

Ultimately, I'd split the difference. Growth near 8% and a valuation of 20 times operating earnings would put the shares around $650 in five years, a mid-single-digit annual return, plus whatever Abel's dealmaking adds on top.

But here's what's interesting about this investment. The downside risk seems low given Berkshire's cash, and there are scenarios that could be far more bullish than we've outlined here if the company deploys its cash into the right assets at the right time. For that reason, I believe Berkshire is a great core holding, even if expectations for the stock are modest. I believe the stock offers meaningful upside potential with low downside risk.

American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Daniel Sparks and his clients have positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, American Express, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.

You've probably run across recommendations to buy into the Vanguard S&P 500 ETF (NYSEMKT: VOO) plenty of times. Even Warren Buffett has recommended low-fee S&P 500 index funds, citing Vanguard's as a prime example. In his 2013 letter to shareholders, he wrote about his directions to his trustee for his eventual bequest to his wife:

Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions or individuals -- who employ high-fee managers.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

Image source: Getty Images.

What would $10,000 grow to in a decade in the S&P 500?

How well can you do with a mere S&P 500 index fund? Let's take a look:

Source: Morningstar.com as of Sept. 3, 2026.

Not bad, right? If you plunked, say, $10,000 into this fund a decade ago, it would be worth $38,212 -- or $41,688, if you'd reinvested dividends along the way.

All this is kind of misleading, though, because you should not be expecting annual gains of 15% or 20% from the S&P 500 every year. The past 15 years have been unusually strong for the stock market. Know that the S&P 500 has averaged annual returns closer to 10% (ignoring inflation) over many decades.

Don't get discouraged about that 10%, though -- because, according to the folks at S&P Dow Jones Indices, over the past 15 years, the S&P 500 index has outperformed a whopping 90% of managed large-cap mutual funds (as of the end of 2025).

What's in the Vanguard S&P 500 ETF?

As you might have guessed, the fund encompasses about 500 stocks. Together, they make up about 80% of the total U.S. stock market's value. So investing in this fund is a lot like investing in the overall American economy. Here are the recent top 10 holdings:

Source: Vanguard.com, as of July 31, 2026.

Should you invest in the Vanguard S&P 500 ETF?

Long-term investors in this fund are likely to do well.

But there are some alternatives worth considering. There are plenty of other solid index funds, for example. There are even some twists on the S&P 500 -- like the Invesco S&P 500 Equal Weight ETF (NYSEMKT: RSP), which invests in the same 500 companies, but weights them equally, not by their market value. This gives each component an equal chance to move the needle.

However you do it, be sure that you're socking away money for your future financial security. Your future self will thank you.

JPMorgan Chase is an advertising partner of Motley Fool Money. Selena Maranjian has positions in Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Broadcom, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Taiwan Semiconductor Manufacturing (NYSE:TSM) is already worth about $2.2 trillion, with shares of the chip foundry trading at about $427 as of this writing.

My prediction: The company's market value passes the $3 trillion mark before 2029. To be specific, that means sometime before the end of 2028, about two years and four months away.

That may sound like a bold call. The stock would need to reach about $580 per share, about 21% above its 52-week high of $479.

But the yearly return the milestone requires is more ordinary than it sounds. And it's a fraction of the pace TSMC's business is growing at today.

Image source: TSMC.

TSMC needs about 14% a year to get there

Going from about $2.2 trillion to $3 trillion is a gain of about 35%. Spread over that stretch, it works out to about 14% compounded annually.

For a business growing the way TSMC is right now, that isn't a high bar.

I'm not assuming investors pay more for each dollar of TSMC's earnings than they do today, either. If the stock's price-to-earnings multiple simply holds steady, the share price should track earnings growth over time. In other words, earnings compounding at about 14% a year through 2028 could arguably get the company there on its own.

A 40% year

Highlighting how far ahead of that bar the business is running, TSMC's second-quarter revenue rose 36% year over year to NT$1.27 trillion ($40.2 billion in U.S. dollars), while net income surged 77%. Gross margin was 67.7%, a big step up from 58.6% a year before. And the momentum has carried into the second half of the year. July revenue rose about 45% year over year, putting revenue through the first seven months of 2026 up 37%.

Management expects more of the same. Guidance calls for third-quarter revenue of $44.6 billion to $45.8 billion. Against the year-ago quarter's $33.1 billion, the midpoint represents about 37% growth -- an acceleration from the second quarter's pace in dollar terms.

In July, management also raised its full-year outlook to revenue growth slightly above 40% in U.S. dollar terms.

"Moving into third quarter 2026, we expect our business to be supported by continued strong demand for our leading-edge process technologies, including the steep ramp-up of our 2-nanometer technology," said Wendell Huang, TSMC's chief financial officer, in the company's second-quarter earnings release.

The company is spending like it expects the demand to last, too. Management now plans $60 billion to $64 billion of capital spending in 2026, up from its earlier budget, and it announced an additional $100 billion investment in Arizona to build several more leading-edge chip fabs and advanced packaging plants.

What could go wrong?

The main risk is concentration.

High-performance computing accounted for 66% of TSMC's revenue in the second quarter, tying the company's growth closely to the artificial intelligence (AI) build-out. If the biggest spenders on AI infrastructure pull back, growth could slow quickly.

Of course, margins could give back some ground, too. Gross margin guidance of 65% to 67% for the third quarter sits below the 67.7% the company just posted. If profitability drifts lower from here, earnings could grow more slowly than revenue does -- and it's earnings growth, not revenue growth, that has to average about 14%.

But the prediction can absorb a lot of deceleration. Say revenue growth halves to 20% in 2027, then halves again to 10% in 2028.

Even that path compounds at about 15% a year over those two years, still above the requirement, assuming profit margins hold near current guidance and the price-to-earnings multiple stays put. And it leaves out the rest of 2026, when growth is running at about three times that pace.

The scenario I take more seriously, however, is a market that changes its mind. If investors sour on AI infrastructure spending, they could pay less for each dollar of TSMC's earnings even while those earnings keep growing. A compressing price-to-earnings multiple would likely raise the bar on the business -- possibly well past 14% a year.

Ultimately, though, a business guiding for revenue growth slightly above 40% this year clears a 14% hurdle with plenty of room to spare, even if growth fades hard through 2027 and 2028. I expect Taiwan Semiconductor's market value to top $3 trillion before the end of 2028.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ:NVDA) has established itself as the artificial intelligence (AI) chip leader, delivering double- and even triple-digit growth in recent quarters. This is thanks to the company's early presence in the space and its commitment to constant innovation.

Though Nvidia clearly dominates, it isn't alone in this high-growth field, and rivals are also seeing success here. This increasing competition is one risk that investors have kept on their radar screens, with the idea that this market giant may eventually lose some share.

But, in recent times, Nvidia has made key moves to stay ahead. One of these is the development of stand-alone central processing units (CPUs) -- an area where Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD) dominate. Nvidia's entry may represent a threat to these players. And now a fresh $12 billion move could represent yet another challenge for Intel and AMD. Did Nvidia just say checkmate to its fellow chip players? Let's find out.

Image source: Getty Images.

Nvidia's leadership

First, let's consider Nvidia's competitive path so far. As mentioned, Nvidia ensured its market position by entering early -- that headstart, along with frequent launches of updated platforms and an expansion of products and services, has maintained the company's market position. Though rivals such as AMD and Intel have launched AI chips and systems and have delivered growth, Nvidia remains significantly ahead.

AMD and Intel, however, are longtime leaders in CPUs, the type of chips found in all computers. In the earliest stages of the AI boom, the CPU didn't play a big role. Instead, chips such as graphics processing units (GPUs) powered tasks like model training. But in the next stages of the boom, the CPU is expected to shine as it fuels the actions of AI agents.

Nvidia, aiming to benefit from this next phase of AI growth, is launching its first stand-alone CPU -- and already forecasts $20 billion in CPU sales this year. The company says it expects to dominate this market too.

This isn't great news for AMD and Intel, and Nvidia's latest move might represent an even bigger challenge. Nvidia this past week announced its plan to buy open-source AI platform Hugging Face for $12.9 billion.

What is Hugging Face?

What exactly is Hugging Face? It's a place where developers, researchers, companies, and tech fans can go to freely access, build, and test AI models. The acquisition, Nvidia's second-largest after the purchase of Groq assets last year, is a wise move for Nvidia as it broadens the company's position in the AI ecosystem and brings it into contact with a wide range of developers who require compute.

Nvidia has pledged to keep Hugging Face neutral, a platform supporting the use of compute from any provider.

"Nvidia compute will not be required to build on or deploy through Hugging Face," chief Jensen Huang wrote in a blog post announcing the deal.

But analysts have speculated that Nvidia software stacks could eventually see better integration than those of others, a point that could work in Nvidia's favor.

So, considering all of this, did Nvidia just say checkmate to AMD and Intel? This latest acquisition isn't the best news for Nvidia's rivals, as it further expands this leader's presence in the AI ecosystem and offers it a certain level of control in yet another area. But it's unlikely Nvidia would take steps that would significantly weigh on rivals -- if developers relying on AMD or Intel compute face difficulties on Hugging Face, they may not stick around. Nvidia must ensure a high-quality user experience for everyone to maintain Hugging Face's usefulness and popularity.

All this means Nvidia didn't exactly say checkmate to AMD and Intel – they may face some headwinds, but I expect growth to continue, as there is plenty of room for more than one player in this space. At the same time, the acquisition of Hugging Face is a fantastic move for Nvidia, further broadening its role in this AI revolution.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool has a disclosure policy.

Ahead of Lululemon's (NASDAQ: LULU) fiscal Q2 earnings report, I wrote an article published on Aug. 26 that said the stock looked like a value trap and that the warning from Dick's Sporting Goods would likely spill over and impact it as well. The stock subsequently plunged 17% on Sept. 4, in the session following its earnings report, as the athleisure company reported disappointing results and cut its full-year outlook. The stock has now lost more than half its value this year and nearly three-quarters of its value over the past five years.

Let's dive into the yoga brand's latest results and prospects to see what could come next for the once-high-flying apparel stock.

Troubles continue

Unfortunately for Lululemon, cutting guidance has become commonplace. For the fourth time since last June, it slashed its full-year outlook. It now expects revenue to decline by 7% to 5% to between $10.35 billion and $10.5 billion, down from prior expectations for sales in a range of $11 billion to $11.15 billion. Full-year adjusted EPS is projected to be between $9.48 and $9.73, but that includes a $0.86 tariff refund. Earlier, it guided to adjusted EPS of $10.95 to $11.15 without a tariff refund.

The company's Q2 results were pretty dreadful, and it looks like things are only worsening. Management noted everything from negative social media commentary to weak responses to new product launches to increased competition and brand deterioration.

Overall, the company's Q2 revenue fell 4% year over year to $2.42 billion, missing the $2.46 billion consensus estimate. Adjusted earnings per share (EPS) plunged 34% to $2.01, but were above the $1.79 consensus.

The underlying numbers were even worse. Americas revenue sank 8%, while same-store sales plunged 12%. International revenue rose 4%, but only 2% in constant currencies, while comparable sales in constant currencies slipped 6%.

China had long been a bright spot for Lululemon, but revenue fell 2% in constant currencies while same-store sales dropped 8% excluding foreign currency movements. The company said it was impacted by negative brand sentiment, which shouldn't be surprising given its big PR gaffe in China when, at an important yoga event held on the Great Wall, it inadvertently gave a Chinese actor a Japanese taiko drum to play instead of a Chinese dagu drum. Rest-of-world sales rose 6% in constant currencies, but comparable-store sales on the same basis dropped 6%.

Gross margin decreased by 200 basis points to 60.5%, but it would have been down 360 basis points when excluding the tariff refund.

Inventory was basically flat year over year, and it is doing a decent job of keeping this in check. This is an important metric to monitor for struggling brands, as big increases above sales growth can lead to more markdowns and sales.

Looking ahead, things will start getting worse for the company just as its new CEO takes over. While it is not uncommon to set a low bar when a new CEO or CFO comes on board, the company still projected a pretty meaningful sales decline. It expects Q3 revenue to decline by 10% to 11% to between $2.290 billion and $2.320 billion. Adjusted EPS is expected to fall to between $0.93 and $0.98 for the quarter, versus $2.59 a year ago.

Image source: The Motley Fool

Is the stock a buy on the dip?

While Lululemon stock looks cheap, now trading at a forward price-to-earnings (P/E) ratio of around 9 times this year's and next year's analyst estimates, the stock looks like it is set to fall into the same trap as other once very popular athletic apparel brands like Nike and Under Armour. The brand has lost its luster and faces increased competition, and, quite frankly, from my viewpoint, the athleisure fashion trend is shifting. I was recently eating lunch at Panera, and nearly everyone was wearing jeans. That is not something you would have seen a few years ago.

As such, this is a stock I'd still stay far away from, and it will likely take at least several years for a potential turnaround.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends Lululemon Athletica Inc. and Under Armour. The Motley Fool has a disclosure policy.

Michael S. Perry, a Director at Arrowhead Pharmaceuticals (NASDAQ:ARWR), sold 11,600 shares of common stock on Aug. 18, 2026, according to an SEC Form 4 filing.

Transaction summary

Transaction value based on SEC Form 4 weighted average sale price ($87.30); post-transaction value based on Aug. 18, 2026, market close ($87.90).

Key questions

• What were the specific execution details of this open-market sale?
  The shares were disposed of in multiple transactions at prices ranging from $87.20 to $87.44, with the reporting person providing full trade data to the company and the SEC upon request.
• How does this transaction impact the insider's total stake in the company?
  By selling 11,600 shares, the director liquidated 9% of his direct holdings. However, he remains a stakeholder with 0.0791% of the company's equity and continues to hold common stock underlying unvested restricted stock units.
• What is the current market valuation context for Arrowhead Pharmaceuticals?
  The Pasadena-based biotechnology company maintains a market capitalization of $12.2 billion, with shares priced at $89.41 as of the Aug. 19, 2026, market close.
• What are the fundamental financial metrics for the firm?
  Arrowhead Pharmaceuticals reported trailing twelve-month revenue of $669.5 million and a net loss of $320 million as it continues to advance a therapeutic pipeline centered on RNA interference technology.

Company Overview

Company Snapshot

• Arrowhead Pharmaceuticals develops innovative biopharmaceutical treatments leveraging RNA interference (RNAi) technology, with a clinical pipeline focused on complex, challenging-to-treat diseases, and generates revenue through therapeutic development and commercialization.
• The company operates as a discovery-stage to clinical-stage biopharmaceutical enterprise, advancing multiple therapeutic candidates through clinical trials to achieve regulatory approval and subsequent commercialization in the United States market.
• Arrowhead targets patients with rare genetic diseases and complex liver conditions, including alpha-1 antitrypsin deficiency, positioning itself in the specialty pharmaceutical and orphan drug markets where unmet medical needs remain substantial.

Arrowhead Pharmaceuticals, founded in 1989 and headquartered in Pasadena, California, represents a clinical-stage biopharmaceutical company with a market capitalization of $12.2 billion and 711 employees. The company's strategic focus on RNAi-based therapeutics provides a differentiated technological platform for addressing genetic and metabolic disorders with limited treatment options. With TTM revenue of $669.5 million and continued investment in its pipeline, Arrowhead demonstrates the capital-intensive nature of biopharmaceutical development. However, the company remains positioned to capture significant value upon successful advancement and commercialization of its clinical candidates.

What this transaction means for investors

Over the last 12 months, the Arrowhead stock price has skyrocketed 217.7%. In comparison, over the same period, the S&P 500 has climbed 18.8%. With that context and the amount of shares sold, this appears to be a routine transaction from Perry. While he did sell 11,600 shares, he still directly holds 111,459 shares, signaling continued confidence in the company. The sale is likely just Perry taking some profits off the table, and not something shareholders should read too much into.

For what's ahead for the company, analysts are bullish, but shareholders may still want to keep their expectations in check. With the stock already climbing over 217.7% over the past year, it will be difficult to keep that pace. According to CNN, all 14 who cover the stock rate it a buy. Among those analysts, the median one-year price target is $109.50, representing a 26.8% gain from the current price of $86.34. The highest price target, $126, would represent a gain of nearly 46%. The lowest price target, $100, still would represent a gain of 15.8%.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Anthropic, the company behind the Claude artificial intelligence (AI) models, plans to publish its initial public offering (IPO) prospectus after Monday's Labor Day holiday, The Information reported late last month. A listing may follow as soon as late September or in October. Amazon (NASDAQ:AMZN) shareholders have a more specific reason than most to open the document when it lands.

On April 20, Anthropic committed to spend "more than $100 billion over the next ten years" with Amazon Web Services (AWS), Amazon's cloud computing segment. That promise is equal to about a fifth of AWS's backlog of contracted work, which reached about $496 billion in June.

In other words, Amazon has already told investors how much one of its biggest cloud customers intends to spend. What no Amazon filing can show is whether the customer's own finances support it. That's what the prospectus is for.

Image source: Getty Images.

The contract is already in Amazon's filings

April's agreement covers up to 5 gigawatts of capacity on Amazon's own silicon -- Graviton processors and Trainium2 through Trainium4 AI chips, with an option on future generations.

Amazon's filings show what a deal that size does to the backlog. AWS's backlog (commitments in customer contracts with original terms longer than one year that haven't yet been recognized as revenue) had grown to about $496 billion by June 30. That was up from about $364 billion in March, and from $195 billion in the middle of 2025 -- growth of 154% year over year, including a $132 billion jump in a single quarter. And the Anthropic deal wasn't alone. The filing also discloses a $100 billion, eight-year expansion of AWS's existing $38 billion commitment from OpenAI, announced a quarter earlier.

Not only is AWS's contracted future far bigger than it was a year ago, but more of it also sits years away from becoming revenue. The weighted-average remaining life of the segment's long-term contracts stretched from 4.0 years to 6.4 years over those 12 months.

One half of the deal is easy to check

Of course, a backlog is signed work, not guaranteed revenue. Amazon says the amount and timing of what it recognizes "will be driven by customer usage and our performance in accordance with contractual obligations."

Amazon's half of that sentence looks strong. In the second quarter of 2026, AWS's revenue rose 37% year over year, to $42.2 billion -- the segment's fastest growth in 18 quarters and a $169 billion annualized pace. Segment operating income rose about 63% year over year to $16.6 billion. And the AI business inside AWS passed a $25 billion annualized revenue pace of its own, growing triple-digit percentages.

The customer's half is the part I can't verify yet. Anthropic is private, and its reported growth is extraordinary. In April, the company said its annualized revenue pace had passed $30 billion, more than triple its level entering the year. And by mid-August, CNBC reported, Anthropic was telling investors the pace had reached $65 billion by the end of July.

Spread evenly, the commitment works out to more than $10 billion a year, or about 6% of AWS's current annual revenue pace. That's arguably affordable if Anthropic's growth holds, and heavy if it doesn't.

And Amazon isn't just supplying the capacity. Its latest quarterly filing shows the company has put another $10 billion into Anthropic this year, with up to $15 billion more available under a financing arrangement tied to compute-delivery milestones. That means Amazon's interest in Anthropic's financial health goes beyond the contract itself.

What does a prospectus settle?

Nearly everything the market knows about Anthropic's finances today is reported, not filed. The company's only filing on record is the confidential draft it submitted to the Securities and Exchange Commission in June.

Its expected market value is a projection. People familiar with the matter told CNBC last month that the company could go public at a valuation of about $2 trillion, about double its private-market value. Its revenue pace is self-reported, and no audited numbers are public.

A prospectus replaces the estimates with audited financial statements: actual revenue, actual profit or losses, and actual cash. Even more useful for Amazon shareholders, it should carry Anthropic's own accounting of its purchase commitments, the other side of the agreements that swelled AWS's backlog.

At about $259 as of this writing, Amazon's stock trades at a forward price-to-earnings ratio of about 24. For a company whose cloud segment just accelerated to 37% growth, I think that's a reasonable price.

But AWS has now disclosed more than $200 billion of multi-year commitments from just two private AI companies, and until those companies file, investors can only judge them by reported figures.

Ultimately, Anthropic's prospectus is the first chance to check one of them. I'll be reading it closely.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

Bank of Nova Scotia (NYSE: BNS) is offering investors a nearly 3.5% yield. The average bank's yield is around 2.2%, and the S&P 500 index (SNPINDEX: ^GSPC) has a tiny 1% yield. If you are looking for a high-yield bank stock, Scotiabank, as it is more commonly known, is probably worth a close look. But the real dividend story is about consistency. Here's what you need to know.

Bank of Nova Scotia has shifted gears, but not changed its dividend policy

Recently, Scotiabank made a major change in its business. For a long time, the Canadian bank had skipped the U.S. market, focusing instead on Central and South America. That differentiated it from its large Canadian peers, which had focused on growth in the U.S. Scotiabank's plans didn't work out as well as hoped, so it shifted gears. Now, like its peers, it is increasing its focus on the U.S., with a goal of offering its services from Mexico to Canada. Those three countries are contiguous and important trading partners.

Image source: Getty Images.

What's notable is that Scotiabank has made this shift without resorting to a dividend cut. In fact, the biggest impact that dividend investors felt was a one-year pause in dividend increases. When you look at the company's history, however, that makes total sense. Scotiabank has paid dividends every year since 1833, over 190 years ago. And, unlike many of the largest U.S. banks, it also didn't cut its dividend during the Great Recession.

Scotiabank's efforts to grow in the U.S. market will likely be a net positive, but the real story here isn't about growth. This is a slow-and-steady business that will help you build wealth over time. Dividend reinvestment would allow for powerful compounding, given the above-average yield and incredible dividend history. The real story, then, is consistency, which is powered by the bank's Canadian operations.

Canada's banking system is highly regulated. That has left Scotiabank with a fairly conservative corporate culture and provides it, along with a small number of other large banks, with a protected market position. So its efforts outside of Canada are building atop a strong foundation. That foundation is so strong that Scotiabank was able to materially change its corporate direction without a major impact on the dividend.

When it comes to dividends, slow and steady can be very exciting

Will Bank of Nova Scotia make you rich? Perhaps, but certainly not quickly. This is the type of company you buy and hold for the long term because it has a fundamentally strong business. If you give it long enough, it can be a powerful wealth builder when included in a diversified income portfolio.

Reuben Gregg Brewer has positions in Bank Of Nova Scotia. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

Applied Digital: Accelerating and Sustained Revenue Curve

Applied Digital (NASDAQ:APLD) primarily generates its revenue by operating centralized digital infrastructure campuses and providing dedicated computing services designed for high-performance workloads across the North American region.

It recently signed an additional facility lease for a new campus and secured supplemental credit financing for ongoing construction, while reporting an operating margin of -45% for the quarter ended May 31, 2026.

IREN: Navigating a Period of Sequential Contractions in Top-Line Revenue

IREN (NASDAQ:IREN) earns the majority of its ongoing revenue by managing vertically integrated data center facilities and actively mining digital assets across its international infrastructure footprint.

While integrating a newly acquired European data center developer and closing the purchase of cloud software provider Mirantis, it recorded an operating margin of -452% for the quarter ended June 30, 2026.

Why Examining Core Revenue Generation Matters for Investors

Revenue serves as a primary starting point for investors to evaluate a corporation's ability to attract paying clients and generate gross business volume before standard operational expenses, local taxes, or daily administrative costs are finally subtracted. For neocloud operations such as Applied Digital and IREN, revenue growth is essential to understanding if their costly artificial intelligence infrastructure buildouts are paying off.

Analyzing the Comparative Quarterly Revenue Trajectories for Applied Digital and IREN

Data source: Company filings. Data as of Sept. 4, 2026.

Foolish Take

When it comes to neocloud providers such as Applied Digital and IREN, understanding revenue trends is essential to investing in these companies. A neocloud's massive, debt-fueled costs to build AI data centers means they must achieve top-line sales growth, or their business could collapse.

That's why it's important to unpack IREN's recent trend of declining quarterly revenue. The company decided to shift away from mining cryptocurrency and focus on the high-growth AI infrastructure market. This caused its crypto sales to fall.

In IREN's 2026 fiscal fourth quarter ended June 30, its crypto mining revenue dropped to $66.7 million compared to $111.2 million in the previous year. That said, its fiscal Q4 AI cloud sales took off, hitting $70.5 million, up from $33.6 million in the year prior. So while overall revenue dropped from fiscal Q3, it's experiencing strong growth in AI. That's the trend investors want to see.

Applied Digital's situation is more straightforward. As a landlord to AI companies, it just needs to sign lease agreements that grant it long-term revenue predictability, while tenants bear the brunt of outfitting data centers with the AI hardware. The skyrocketing sales in its fiscal fourth quarter, ended May 31, demonstrates it is gaining traction in this arena.

Robert Izquierdo has positions in Iren. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Businesses change over time. Sometimes that change can turn a once-risky company into an attractive investment, but only if you can overlook the prior history. Here's why Energy Transfer (NYSE: ET) could be a buy now and why some investors may still prefer to own a lower-yielding peer like Enterprise Products Partners (NYSE: EPD).

Energy Transfer has made "mistakes"

Let's get the bad news out of the way first. Energy Transfer agreed to buy pipeline peer Williams (NYSE: WMB) in 2006. It got cold feet when the energy sector hit a weak patch and worked to scuttle the deal. That was probably the right move for the business, which would have likely needed to load up on debt to get the deal done and/or cut the dividend. However, as part of its effort to get out of the acquisition it had agreed to, the company issued convertible securities that appeared to protect insiders from a dividend cut if the deal had gone through.

Image source: Getty Images.

The deal was called off, so the converts turned out to be a non-issue for dividend investors. However, it was a move that would justifiably leave investors with trust issues. Then, during the 2020 oil downturn that accompanied the coronavirus pandemic, the partnership cut its distribution in half. The goal was to strengthen the balance sheet and reposition the business.

This was, again, likely a good move for the business. However, the problem is that the recession during that period was probably a point when dividend investors were hoping for consistency, not dividend cuts. The distribution is growing again and is above its level prior to the cut. And, perhaps more importantly, the business is on a different trajectory today than it has been historically, with what appears to be a focus on slow and steady growth.

Energy Transfer wants to be a tortoise like Enterprise

At this point, Energy Transfer is looking to grow its distribution by 3% to 5% per year. That's the slow-and-steady pace that investors have come to expect from peer Enterprise Products Partners. The difference is that Enterprise doesn't have the same negative events in its past. In fact, Enterprise has increased its distribution annually for 28 years. Conservative investors will probably be better off with Enterprise.

There's just one niggle here. While Enterprise offers an attractive 5.6% yield, Energy Transfer's yield is an even higher 6.3%. To be fair, Enterprise is a simpler business, noting that Energy Transfer also controls two other publicly traded master limited partnerships. The higher yield isn't just about the history; it requires more time and effort to track Energy Transfer. And Energy Transfer does appear to be a riskier investment than Enterprise.

That said, for investors willing to take on the risk, the reward is roughly 12.5% higher income due to the 0.7 percentage-point difference in yields offered by Enterprise and Energy Transfer. Given the repositioning of Energy Transfer's business, including reduced leverage, that could be enough to entice more aggressive and active income investors.

Energy Transfer is not a slam dunk

The real takeaway here is that Energy Transfer is a far more attractive income investment today than it was in the past. But that past is important to understand because it could leave more conservative investors with trust issues. And, if that's the case, Energy Transfer, despite an attractive yield, may not be the right choice for you. But, if you can forgive those transgressions and believe the MLP has turned into a slow and steady income tortoise, you might want to give it a shot. Just go in with your eyes open and track the business fairly carefully.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.

If you are old enough, you remember a time before the internet. And you also remember Yahoo! and America Online being two of the most dominant internet companies early in the internet's development. The stocks were hot way back then, but today, both have basically flamed out and been swallowed up by other companies. Other internet companies became more dominant.

This isn't unusual in the tech sector, and investors piling into artificial intelligence (AI) stocks should keep that in mind. Sure, you could make a big bet on an AI stock that you think has winning tech, like a high-powered chip or a specialized application, or you could go with a picks-and-shovels play like Brookfield Renewable (NYSE: BEP)(NYSE: BEPC). Here's why this clean energy company could be the better bet.

Image source: Getty Images.

AI Investors are being driven by emotion

Right now, artificial intelligence is a hot sector. Too many investors see it as a way to get rich quickly. And that has had pretty predictable consequences. For example, SoundHound (NASDAQ: SOUN) provides AI voice services. That's exciting, but probably not unique enough to build a business around. Still, its stock skyrocketed as investors jumped on the next hot thing. The shares have since plunged back to earth, down 70% from their 2024 peak.

The same could be happening now with Western Digital (NASDAQ: WDC), a maker of data storage devices. Huge demand from the AI build got investors excited about the stock, but that excitement has begun to fade. The stock has fallen roughly 40% from its recent highs. That's actually the second huge drawdown over the last three years. Even AI poster-child Nvidia (NASDAQ: NVDA) has proven to be a highly volatile stock.

NVDA data by YCharts

If you can't stand the AI volatility, go with a picks-and-shovels play

But, there's one thing that AI can't live without: electricity. After all, AI is really just a fancy computer program. Electricity demand is so high right now that there's been a step change. Between 2005 and 2025, U.S. electricity demand increased by 10%. Between 2025 and 2045, U.S. demand is projected to increase 60%. AI is playing a major role in the changing dynamics of electricity. Globally, however, there's also a shift toward cleaner power sources and increasing demand from developing nations. A great way to benefit from AI, clean energy, and broader economic growth is Brookfield Renewable.

Brookfield Renewable owns a globally diversified portfolio of clean energy assets, with exposure to North America, South America, Europe, and Asia. Its power portfolio includes solar, wind, hydroelectric, and storage. It also owns a stake in Westinghouse, a key global supplier to the nuclear power industry. It is a one-stop shop for clean energy exposure, and it is already working with AI-focused companies like Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG) to help them build out their AI businesses.

The best part of the story, however, is likely to be Brookfield Renewable's dividend. The yield is currently around 5% for the partnership share class and 4.9% for the corporate share class. The quarterly disbursement has been increased at a roughly 5% annualzed pace over the past decade. Add a 5% dividend to a 5% dividend growth rate, and you get roughly 10%, which is about the return most investors expect from the broader market.

The future is bright for Brookfield Renewable

AI is just part of the electricity story that supports Brookfield Renewable's long-term growth opportunity. Which is actually more exciting than if AI were the only thing this clean energy company had going for it. If you are a dividend investor looking to benefit from AI, forget trying to pick a winner in the volatile AI sector and dig into high-yield Brookfield Renewable. It is already benefiting from AI's intense demand for power, but there's much more opportunity than that.

Reuben Gregg Brewer has positions in Brookfield Renewable Partners. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, SoundHound AI, and Western Digital. The Motley Fool recommends Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

Since the start of 2026, the S&P 500 (SNPINDEX: ^GSPC) has generated total returns, aka price appreciation with dividends reinvested, of around 14% well above historical averages.

However, plenty of stocks have beaten the S&P 500 this year, and not just the hottest names in tech. In fact, there's one stock in particular, one that may not exactly scream "cutting edge," that has crushed it thus far in 2026, with total returns of more than 24%.

The stock? Altria Group (NYSE: MO), America's largest tobacco company and purveyor of popular brands such as Marlboro and Skoal, as well as the nicotine pouch brand On! The question now is whether Altria Group's shares will remain one of the top-performing high yield dividend stocks.

Image source: Getty Images

Altria Group has smoked the S&P 500 in 2026

At the start of 2026, investors were mixed on this Big Tobacco stock. At the time, concerns ran high about Altria's ability to adapt to changing nicotine and tobacco consumption habits. Namely, investors were concerned about the company's falling market share in smokeless tobacco and oral nicotine products.

As these products continue to gain or sustain usage rates, while cigarette smoking rates in the United States keep declining, Altria's future hinges heavily on the company making a successful smokeless transformation, much like its former subsidiary, Philip Morris International, has successfully accomplished.

However, during much of early to mid 2026, these concerns took a back seat. For one, due to better-than-feared quarterly results. Tobacco stocks in general also performed well during this time, on growing confidence in the industry's smokefree pivot, which inspired some institutional investors who had shunned the sector to reenter major stocks in the space.

Trading for as much as $77.06 per share in 2026, Altria tumbled back to the mid-$60s per share in August, on the heels of the company's Q2 2026 earnings release on July 30.

Recent pullback highlights long-term risks

For the quarter, Altria reported just 1.2% net revenue growth, with sales net of exice taxes rising to $5.35 billion. GAAP earnings came in at $1.37 per share, down 2.8% from the prior year's quarter, and falling short of analyst estimates.

Despite declining domestic cigarette usage, Altria has continued to raise earnings and, in turn, its dividend, thanks to cigarette price hikes and growth from its smokeless products. However, price elasticity with cigarettes may only go so far. While demonstrating some success with products like On!, this still pales in comparison to the success of Philip Morris International's Zyn nicotine pouches.

Since August, shares have inched higher, thanks to an announced 4.7% dividend raise and news of a contract manufacturing agreement with Philip Morris International that could help utilize excess production capacity .

Trading for 12 times forward earnings, and with a 6.4% forward dividend yield,Altria still seems cheap. Coupled with its high dividend and strong 2026 performance, it may still seem like a winner. However, this stock could still prove risky for the long-term health of your portfolio. If the company's earnings gambit starts to fail, earnings could take a dive, threatening the stock's Dividend King status and turning this deep-value winner into a yield-and-value trap.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.

Netflix (NASDAQ:NFLX) raised prices on every one of its U.K. plans in the past few days. The ad-supported standard plan took the biggest jump, moving from £5.99 to £7.99 a month (a third more), while the ad-free standard plan went to £13.99 and premium to £20.99. New members pay the new prices right away, and existing members typically get 30 days' notice before the change reaches their bills.

Shares of the streaming giant fell 5.4% on Friday to $78.25, the same day the increase made headlines.

Price increases are nothing new for this company, though. Netflix has been raising prices for 15 years, in markets all over the world, and its annual revenue has grown every single year through all of them.

But that streak is a low bar. The better measure, I'd argue, is what each increase did to the company's revenue growth rate -- and that record is more interesting than the streak itself.

Image source: Netflix.

The increases are coming faster

Netflix last raised U.K. prices in February 2025, when the ad-supported plan went from £4.99 to £5.99 a month. That makes this the second U.K. increase in about 19 months, and it leaves the ad tier costing 60% more than it did at the start of last year.

Netflix raised U.S. prices in March too, its second increase there in about 14 months, taking the standard plan from $17.99 to $19.99 a month.

Notably, the ad-supported tier (the plan built to catch price-sensitive members) is climbing fastest in both markets.

Revenue has grown through every increase

The worst increase Netflix ever made came in July 2011, when the company split its $9.99 streaming-plus-DVD plan into two $7.99 plans. Management acknowledged in its second-quarter 2011 shareholder letter that the change could be "as much as a 60% increase" for members who wanted to keep both services.

Hundreds of thousands of members canceled. Netflix ended the third quarter of 2011 with about 23.8 million U.S. subscribers, down about 805,000 in three months. And still, revenue rose 48% that year, and it grew another 13% in 2012.

The closest the streak has come to breaking was 2022. Netflix had raised U.S. prices that January, taking the standard plan from $13.99 to $15.49, and revenue for the year grew just 6.5% -- the company's slowest year of growth in at least a decade. A subscriber slump and a strong dollar contributed too. Even then, the top line grew. Growth stayed slow in 2023, then reaccelerated: revenue rose about 16% in both 2024 and 2025, reaching $45.2 billion last year, and 2025 opened with another round of U.S. price increases.

In short, no Netflix price increase has ever been followed by a down year of revenue. Where an increase can show up is in the growth rate, and even the clearest case took more than pricing to get there.

Will the ad tier change the pattern?

What's different this time is where the increase lands. Netflix's advertising business is its fastest-growing revenue line (ad revenue topped $1.5 billion in 2025, up more than 150%, and management is aiming to roughly double it this year), and that business depends on the ad-supported plan attracting members. Raising the plan's price by a third may test how much that audience is willing to pay.

The early evidence from the U.S. increase looks fine. In the shareholder letter accompanying its second-quarter results, Netflix said U.S. and Canada revenue grew 10% year over year, with what it described as only a partial quarter of impact from the March increase. The change, in management's words, "has gone well and as expected."

The companywide trend deserves more caution. Second-quarter revenue growth was 13% year over year, and the forecast for the third quarter is 11.7% -- a decelerating path. Full-year revenue guidance sits at $51.0 billion to $51.4 billion, or 13% to 14% growth, down from nearly 16% in 2025.

Meanwhile, engagement is nearly flat, with members watching only 2% more hours in this year's first half than in last year's. In other words, more members, higher prices, and advertising are carrying the growth, not more hours watched.

Ultimately, I expect the streak to survive this increase too. That kind of pricing power, I think, is rare, and Netflix has proved it over and over.

But the stock's valuation arguably already gives the company credit for it. At about $78, the price-to-earnings ratio is about 20 measured against expected 2027 earnings, a level that arguably assumes the pricing power continues.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

If you were fortunate enough to invest $1,000 in Bitcoin (CRYPTO: BTC) a decade ago on Sept. 3, 2016, you would have roughly $126,810 today -- an incredible return that absolutely crushed the market. Take a look at that incredible growth in the chart below:

Data by YCharts.

Note that the calculation excludes trading fees and taxes, and the exact total fluctuates daily with Bitcoin's price. Still, turning four figures into six figures in one decade is a remarkable result by any standard.

Bitcoin's 62% annualized return beat every mainstream asset since 2016

That's putting it lightly. Few things came remotely close to a 12,581% return -- a 62% annual rate -- in that time. Compare Bitcoin's annual rate of return with some other options you would have had in 2016.

Source: YCharts.

Wall Street now holds Bitcoin despite a decade of major crashes

Bitcoin suffered some brutal drawdowns along the way, and most investors jumped ship. It wasn't easy to hold on after a 70% crash while the "smart money" said to stay far away from Bitcoin.

Things have changed. Major institutions across Wall Street now hold Bitcoin. Motley Fool Research tracks major Bitcoin holdings by governments, public companies, and exchange-traded funds.

Image source: Getty Images.

Of course, the flip side of that adoption is that it's highly unlikely we'll see returns in the future that come close to what we saw in the past. Still, I think Bitcoin is a smart addition as a small portion of a well-balanced portfolio.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX), commonly referred to as SpaceX, got an initial share price bounce when it IPO'd due to enthusiasm about what it might do over the years to come -- such as building orbital data centers. It's also an Elon Musk company, which draws a lot of interest. (Tesla has averaged annual gains of 39% over the past decade.)

You might be wondering whether you should buy shares yourself or just forget about it.

I myself am forgetting about it, but every investor is different, so it's worth learning more and making your own decision. Here are some considerations.

Image source: Getty Images.

Why you might buy SpaceX

Here are reasons for buying:

• Some Wall Street analysts are bullish on it. The stock recently traded around $150 per share (as of Sept. 3), and the average one-year price target from analysts is $222, roughly 48% higher.
• SpaceX is a leader in space launches, and its Starlink leads in satellite communications. Those are areas with plenty of growth potential. It also has an artificial intelligence (AI) platform.
• It's already growing. Its second quarter featured revenue up 92% year over year to $7.8 billion.

Why you might forget SpaceX

Those may be some compelling reasons to buy, but here are some reasons to pass on SpaceX:

• While revenue is up, its bottom line is red, with a second-quarter net loss of $541 million. (That's an improvement from the year-earlier loss of $1 billion.)
• Its valuation is steep. There are no earnings, so there's no price-to-earnings (P/E) ratio. But the price-to-sales ratio is a steep 65, and the forward-looking P/E ratio was recently 194. There's no margin of safety here. If the company fumbles, the stock could fall sharply.
• More than a billion early investors' shares will be "unlocked" in September and October, allowing them to be sold -- which could send shares downward.

Think it through for yourself and do some more research. I'm steering clear based on what I'm seeing.

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

If you'd invested $10,000 in shares of Nvidia (NASDAQ: NVDA) a decade ago, your investment would now be worth almost $1.5 million.

Various catalysts have driven the astronomical rise in Nvidia stock over this period. The strong demand for graphics cards used in personal computers (PCs), driven by gaming and cryptocurrency, along with the artificial intelligence (AI)-fueled surge in data center graphics cards, has been instrumental in boosting Nvidia's revenue and earnings in recent years.

Nvidia's robust growth drivers have made it the world's largest company by market cap. Investors, therefore, may be wondering whether this semiconductor bellwether can make them millionaires once again in the long run. Let's see whether Nvidia can replicate its stunning returns over the coming decade and turn $10,000 into a million dollars.

Image source: Getty Images.

A 100x jump in Nvidia stock is unlikely, but that's half the story

Nvidia now has a market cap of $5.5 trillion. The stock will need to jump by 100x from current levels to turn $10,000 into a million, which means its market cap will need to exceed $500 trillion for investors to become millionaires.

That seems absurd, considering that the size of the global economy is poised to hit $150 trillion in 2030, according to Visual Capitalist. The firm notes that the global gross domestic product (GDP) is on track to grow by $25 trillion between 2026 and 2030. Nvidia, therefore, is unlikely to become larger than the global economy in the long run.

In simple words, investing $10,000 in Nvidia right now in the hope that this single investment alone will make you a millionaire is not the right idea. However, buying $10,000 worth of Nvidia's shares as a part of a diversified portfolio could indeed help investors achieve their goal of becoming millionaires over the long run.

Here's why.

Nvidia can become a much bigger company over the next decade

Nvidia has grown significantly over the last decade. The company's annual revenue in fiscal 2017 (which ended in January 2017) was $6.9 billion. Analysts expect Nvidia's revenue to land at $411 billion in fiscal 2027, an increase of almost 60x in a decade.

The good news for Nvidia investors is that it still has a lot of room for growth. Deloitte estimates that the global semiconductor market could be worth $975 billion in 2026, with $500 billion coming from sales of AI chips. Nvidia rival AMD forecasts that sales of AI accelerator chips could hit $1 trillion in 2030. Even better, the overall semiconductor market could be worth $2 trillion in 2036, according to Deloitte, even with moderate growth.

Nvidia is a key player in the global AI chip market with an estimated 80% share. So, the secular growth of the semiconductor market, primarily fueled by AI chips, should ensure healthy long-term growth for Nvidia. Additionally, the emergence of new AI-fueled applications beyond data centers, such as physical AI, and the integration of AI into edge devices, such as PCs, should open additional growth avenues for Nvidia.

The physical AI market, for instance, could be worth $430 billion in 2030 and hit $1.6 trillion in 2040, according to a third-party report. Physical AI refers to the integration of AI into real-world objects, such as machines, robots, and vehicles. The integration of this technology in multiple industries, ranging from healthcare to industrial to defense to space to retail, is poised to drive robust growth in this market over the long run.

Nvidia is already strengthening its position in physical AI. The company noted on its recent earnings call that Amazon will adopt its full physical AI stack to automate its warehouse robots. Noetra, a government-backed Japanese company developing physical AI and industrial robotics applications, will also adopt Nvidia's physical AI tools.

These growth opportunities indicate why analysts expect Nvidia's revenue to increase at a healthy pace even after the strong base it has already achieved.

Data by YCharts

For comparison, Nvidia reported $215.9 billion in revenue in fiscal 2026 (which ended in January this year). The chart above suggests that its top line is on track to increase 4x in just two years. Even better, analysts have been boosting their long-term earnings growth expectations.

Data by YCharts

Assuming Nvidia's earnings indeed increase at an annual pace of 49% for the next five years, its earnings per share will jump to $35 at the end of the forecast period (using fiscal 2026's earnings of $4.77 per share as the base). If Nvidia trades at 21 times earnings at that time, in line with the S&P 500 index's forward earnings multiple, its stock price could jump to $735 in five years.

That's nearly 3.2x Nvidia's current stock price, making it an ideal growth stock for investors looking to build a million-dollar portfolio, especially considering that it trades at an attractive 25 times forward earnings even after its terrific growth and sunny prospects.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, and Nvidia. The Motley Fool has a disclosure policy.

Chevron (NYSE:CVX) just signed a landmark deal to significantly expand its operations in Venezuela. The agreement, which positions the oil giant to double its output over the next five years, is a testament to its patience. "You have to hang in there until all the conditions come together: the technology, the economics, the markets, the politics," stated CEO Mike Wirth in a recent interview with Bloomberg. It stayed long after rivals ExxonMobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) left, putting it in a position to capitalize on this major opportunity to help revitalize Venezuela's oil industry.

Here's a look at how Chevron's patience has proven to be a significant competitive advantage in Venezuela.

Image source: Getty Images.

Staying when things got tough

ExxonMobil and ConocoPhillips both left Venezuela in 2007 after the country nationalized their assets. Both have been seeking restitution, with ConocoPhillips winning an arbitration award of $12 billion that it has been trying to recover for years. The oil companies have been considering a return this year, as they each sent technical teams to evaluate potential investment opportunities. While ExxonMobil CEO Darren Woods called Venezuela "uninvestable" this past January, President Trump recently said that Exxon would be going back into Venezuela.

However, both companies are far behind Chevron, which has maintained operations in the country for over 100 years. That's part of the company's patient strategy in the country. CEO Mike Wirth told Bloomberg: "You have to have some patience and look at this out over time and not become discouraged. Not pick up and leave when things are difficult." By hanging on during the tough times, which included dealing with hyperinflation, power outages, and unstable civil conditions, Chevron was able to pounce when the opportunity came around to participate in the revival of Venezuela's oil industry.

Building on its legacy

Chevron has already been expanding its operations in Venezuela. In April, it consolidated its heavy-oil position in the country through an asset swap with Venezuela's national oil company, Petroleos de Venezuela, S. A. (PDVSA). It received an additional 13.21% working interest in Petroindependencia, increasing its stake in that joint venture (JV) to 49%. Additionally, its Petropiar JV (30% interest) was granted rights to develop the adjacent Ayacucho 8 area in the Orinoco Oil Belt. In exchange, Chevron gave up its interest in two gas licenses and in another non-operated joint venture. This trade enhances Chevron's ability to increase production by 50% by the end of 2028, from its recent rate of 280,000 barrels per day.

Now, Chevron is further building on this legacy position with additional enhancements to its JVs. Its new deal with Venezuela will provide it with more acreage in the Orinoco Belt. Petroindependencia received the rights to develop the adjacent Carabobo-1 and Carabobo-2-South-A areas. Additionally, the deal includes enhanced fiscal, commercial, and legal terms that will support durable, competitive long-term investments in the country. Improved financial terms are something ExxonMobil has been seeking before it would agree to reenter the country.

This increased position and improved terms support Chevron's new plan to invest more than $7 billion over the next five years. That would enable the company to more than double its production to around 600,000 barrels per day. Chevron estimates that its costs will be less than $20 a barrel, positioning it to drive strong earnings growth over the next five years from this investment.

However, while Wirth told Bloomberg that it has "good, high-quality resource positions" in Venezuela, "They're also sometimes not the easiest resource to produce." That's a risk investors should keep an eye on as the oil company ramps up its investment rate in the country. There's also the potential for renewed political risks, both in Venezuela and from future elections in the U.S.

Chevron's patience could pay massive dividends

Chevron's decision to remain in Venezuela during the tough times is paying off. Its existing joint ventures in the country are receiving additional resources, which, together with improved terms, will enable the company to significantly increase production over the next five years. Given its low-cost resources, it could generate meaningful cash flow growth. It now has a huge head start over Exxon and ConocoPhillips, both of which are still evaluating whether to reenter the country. That could benefit the oil stock in the long run, as its low-cost growth in Venezuela could give it the fuel to deliver higher total returns than its rivals over the next few years.

Matt DiLallo has positions in Chevron and ConocoPhillips. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends ConocoPhillips. The Motley Fool has a disclosure policy.

Arista Networks: Steady and Reliable Quarterly Revenue Expansion

Arista Networks (NYSE:ANET) primarily generates its operating income by designing advanced cloud networking solutions, delivering specialized high-performance switching hardware, and providing extensive post-contract technical support to major internet companies and global financial services organizations.

While launching new hardware platforms for data centers and simultaneously expanding its enterprise security portfolio during the summer of 2026, it reported a 45% operating margin for the quarter ended June 30, 2026.

International Business Machines: Highly Volatile and Cyclical Revenue Patterns

International Business Machines (NYSE:IBM) earns a majority of its incoming cash by supplying complex hybrid cloud software ecosystems, developing enterprise server infrastructure, and delivering specialized business transformation consulting services to clients across the globe.

It faced multiple securities fraud investigations regarding its public business deal outlook and completed the acquisition of HRL Laboratories in the summer of 2026 to advance its work in quantum computing. It generated a 15% operating margin for the quarter ended June 30, 2026.

Why Tracking Revenue Matters for Investors

Revenue assists everyday investors understand whether a business is successfully attracting new clients and expanding its broader operational footprint. It serves as a starting point to help investors understand the total amount of money a business brings in before deducting any operational expenses.

Comparing Quarterly Revenue for Arista Networks and International Business Machines

Data source: Company filings. Data as of Sept. 4, 2026.

Foolish Take

The revenue trends for Arista Networks and IBM tell a starkly different story about the trajectories of these businesses benefiting from the massive artificial intelligence tailwind. The former has the advantage as companies rush to build out the data center computing infrastructure required to operate AI systems. This has allowed Arista to experience consistent upward sales growth every quarter, and the trend is poised to continue in Q3, with the company forecasting revenue to hit $3.3 billion.

Meanwhile, IBM has exhibited quarterly revenue volatility. This is a result of its business model, due to a mix of software, hardware, and consulting services. Big Blue's infrastructure segment, which sells mainframes, follows an upgrade cycle, and that division saw a 7% year-over-year Q2 sales decline, suggesting customer upgrades are complete for now. Also, Q2 revenue in its consulting division was flat year over year, as this area is highly variable in terms of customer spending.

IBM cut its 2026 full-year sales forecast as customers shifted spending toward businesses such as Arista, prioritizing AI data center buildouts amid concerns of supply shortages. Its HRL Laboratories acquisition points to the company betting on quantum computers to galvanize future growth. This segment of its business holds the promise of revolutionizing the computing industry.

Robert Izquierdo has positions in Arista Networks and International Business Machines. The Motley Fool has positions in and recommends Arista Networks and International Business Machines. The Motley Fool has a disclosure policy.

Besides the artificial intelligence trade, investors have been obsessed with any macroeconomic news that hits headlines. And it's hard to find a story in recent weeks that captured the market's attention like the U.S surpassing $40 trillion in gross federal debt. By any measure, this is an absolutely mind-boggling number.

The debt balance has expanded by 377% in the past two decades. And it currently represents 123% of the country's total GDP figure. The Congressional Budget Office estimates that it will continue climbing, reaching $64 trillion by 2036.

Investors had better get used to hearing more about the U.S. national debt problem. Here's what this macro trend means for your portfolio in 2026 and beyond.

Image source: Getty Images.

Nothing will change

The U.S. has the world's largest and most advanced economy, driven by dominance in the technology sector. It controls the global reserve currency in the dollar. And it has the most robust and liquid capital markets. These advantageous traits support the argument that the nation can keep borrowing indefinitely.

Of course, this can continue only as long as buyers of Treasuries trust that they will get paid back. So far, this hasn't been an issue. And things that appear unsustainable can go on a lot longer than people anticipate.

It makes sense for the government to embark on stimulative measures during recessions or other adverse shocks. This was precisely what happened during the global financial crisis toward the end of the 2000s, and to help boost the economy when the COVID-19 pandemic hit. The government steps in to keep things running.

What's interesting to see, though, is that the debt burden has kept rising even though the economy is on solid footing. Through the first 10 months of fiscal 2026, the Treasury Department ran a deficit of $1.8 trillion, 10% higher than in the same period last fiscal year. The U.S. spends more on interest payments than it does on national defense.

No matter what politicians say, the government isn't able and willing to cut spending. Just look at the DOGE (Department of Government Efficiency) initiative, which was by any account a failure.

And raising taxes isn't a popular campaign platform, unless politicians want to increase their chances of losing. This means that the debt will keep rising. Furthermore, this supports elevated inflation and interest rates. This will certainly be true relative to the environment we witnessed during much of the 2010s.

Image source: Getty Images.

Own inflation beneficiaries

The investment implications are clear. In this kind of macro backdrop, investors should favor high-quality businesses, particularly those that have pricing power and impressive financials. This isn't necessarily a buy recommendation. But these are companies to dig further into here.

Apple (NASDAQ: AAPL) comes to mind. Its brand resonates strongly with consumers around the globe. Its hardware devices are always in demand, commanding premium prices. And the business is one of the most profitable in the world. On $364 billion in revenue through the first nine months of fiscal 2026, Apple raked in $110 billion in free cash flow.

Another great example is Ferrari (NYSE: RACE). This company doesn't behave like a typical mass-market car manufacturer. Ferrari intentionally caps supply, supporting robust demand and pricing power for its luxury vehicles. And its operating margin was a stellar 31% last quarter.

Investors might not view Visa (NYSE: V) and Mastercard (NYSE: MA) as having pricing power. However, they are certainly beneficiaries of inflation. As consumers are forced to spend more on goods and services, these payment networks are able to process higher volumes, which translates to revenue growth. It also helps that they are incredibly profitable, with net income margins that have averaged more than 45% in the past five years.

These four businesses are set up to continue thriving in the face of mounting U.S. national debt.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Ferrari, Mastercard, and Visa. The Motley Fool has a disclosure policy.

If you were disappointed in your 2026 Social Security cost-of-living adjustment, or COLA, that's understandable. Earlier this year, benefits rose just 2.8%.

Granted, that boost was higher than the 2.5% COLA that came through the year before. But in 2022, 2023, and 2024, Social Security COLAs came to 5.9%, 8.7%, and 3.2%, respectively. So it's easy to see why this year's 2.8% raise just didn't cut it for many retirees.

Image source: Getty Images.

The good news is that current estimates are pointing to a larger Social Security COLA in 2027. But retirees shouldn't necessarily expect that raise to help them maintain their buying power.

The 2027 COLA could disappoint

Current projections are calling for a 2027 Social Security COLA in the 3.4% to 3.6% range. The COLA won't be made official until mid-October, since the Social Security Administration needs to wait on key inflation data from September to run that calculation.

Still, even the low end of that range would be a significant increase over this year's COLA. And many seniors may end up relatively happy with that raise -- at least at first.

But in reality, a 3.4% COLA is likely to fall short. So is a 4.4% COLA or an even larger one, for that matter. In fact, history tells us that pretty much any COLA that comes through in the new year is likely to be a letdown.

Social Security benefits keep losing buying power

The reason next year's COLA is likely to be a disappointment boils down to a flaw in the way those raises are calculated. Social Security COLAs are based on third-quarter changes to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). But the CPI-W focuses on the spending habits of working people -- not retirees on Social Security.

Due to this mismatch, the Senior Citizens League, an advocacy group, reports that Social Security benefits have lost 13.7% of their buying power over the past 10 years. And the reason is that those annual COLAs have not managed to keep up with real-world inflation.

What this also means is that next year's COLA is likely to let seniors down in the same regard. So if you're banking on a larger raise to improve your financial picture, you may need to come up with a different plan.

That plan could involve moving to an area of the U.S. where your Social Security benefits can go further. It could mean downsizing or getting a part-time job. But either way, you shouldn't expect too much out of next year's COLA, even if the number is significantly higher than the boost your benefits received earlier this year.

The Motley Fool has a disclosure policy.