On Holding (NYSE: ONON) designs and sells premium athletic footwear, apparel, and accessories. Footwear generated about 93% of its 2025 sales, while wholesale and direct-to-consumer (DTC) channels accounted for roughly 58% and 42% of revenue, respectively.

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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 »

Shares of On closed at around $28.40 on Sept. 3. A tripling over the next seven years would put the stock near $85, requiring roughly 17% annualized price appreciation.

Although the target may sound aggressive, reaching it may be more achievable than it first appears. On currently trades at only about 13.6 times forward one-year earnings, down from roughly 22.2 times forward one-year earnings at the end of 2025. If that valuation simply holds, earnings will also need to compound at about 17% annually for the stock to triple. Wall Street already expects adjusted earnings per share to grow roughly 18.9% in fiscal 2027.

Slower sales may not mean a weaker brand

Investors have become much more cautious after On's second-quarter results. The stock suffered its worst one-day decline on record after Q2 sales missed expectations and Americas growth slowed to 13% on a constant-currency basis from 17% in the previous quarter.

However, I think one detail deserves more attention. On deliberately limited sales to wholesale partners in a highly promotional market to protect pricing and preserve its premium brand positioning. On the other hand, DTC sales increased 34.3% year over year in constant currency and reached 45.7% of total revenue in Q2. Gross margin expanded by 3.9 percentage points year over year to 65.4%.

Hence, slower wholesale growth does not necessarily mean consumer demand is weakening at the same pace. On may simply be sacrificing some near-term sales to protect pricing and shift more business toward its own higher-margin channels.

Multiple growth areas

On's growth is also becoming less dependent on the Americas market and the footwear category alone. In fact, the company's sales in Asia-Pacific jumped 54.7% year over year in constant currency in Q2. Asia-Pacific now accounts for about 20% of the company's revenue. Apparel sales also increased by 56.2% year over year, although apparel still accounts for only about 6% of companywide sales.

Management expects sales to grow year over year on a constant currency basis in the low-20% range and an adjusted EBITDA margin of 19.5% to 20% in fiscal 2026. On has targeted 20% to 25% annual sales growth and an adjusted EBITDA margin above 20% as its long-term goals.

On does not need to hit the upper end of those long-term targets for my case to work. At today's roughly 13.6 times forward multiple, around 17% annual earnings growth could theoretically support a threefold stock-price increase without any valuation expansion.

The biggest risk will be if recent wholesale weakness signals broader deterioration rather than disciplined inventory management. On's share count is also still rising, while tariffs and a promotional U.S. footwear market could pressure future profitability.

Hence, I believe that DTC growth is a critical number to watch. As long as people continue buying directly from On at strong growth rates, the seven-year compounding case remains much easier to defend for this consumer discretionary stock.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends On Holding. The Motley Fool has a disclosure policy.

Shares of Hyperliquid Strategies (NASDAQ: PURR) gained about 94% in August 2026, easily outperforming Bitcoin (CRYPTO: BTC). However, investors should first understand what soared.

Hyperliquid Strategies is not the same as Hyperliquid (CRYPTO: HYPE), the native token of the Hyperliquid blockchain network. It is a publicly traded company that owns HYPE tokens and earns additional ones by committing some of them to help secure and operate the Hyperliquid network. HYPE itself rose about 60% in August 2026, while Bitcoin gained roughly 25%.

But Hyperliquid Strategies' much stronger performance was not driven only by rising Hyperliquid token prices. Investors were also willing to pay more for the publicly traded company holding those tokens. The decision to buy Hyperliquid Strategies instead of Bitcoin is more complicated than simply comparing their August returns.

Image source: Getty Images.

Hyperliquid Strategies' stock rose much more than the Hyperliquid token

Shares of Hyperliquid Strategies gained far more than the Hyperliquid token in August 2026. PurrmNAV, an independent tracker of the company's market value relative to its underlying assets, estimated that Hyperliquid Strategies traded at about 82% of its net asset value (NAV) on Aug. 18. The company was trading at roughly 1.07 times NAV by Aug. 20. FalconX later reported that the company was trading at about 1.2 times NAV on Aug. 27.

Investors may be willing to pay a premium because Hyperliquid Strategies can earn additional HYPE by using some of its tokens to help support the Hyperliquid network. The company can also issue shares when its stock trades above NAV and use the proceeds to buy more Hyperliquid tokens. If done well, this strategy can increase the value backing each share over time.

The optimistic regulatory environment also seems to be boosting investor sentiment. On Aug. 19, President Donald Trump said U.S. regulators were working on a legal path for the Hyperliquid decentralized perpetual futures trading platform to operate in the country. The comments helped send both the Hyperliquid token and Hyperliquid Strategies shares sharply higher.

The Hyperliquid token's growth is backed by real activity

The Hyperliquid platform already has a strong position in crypto trading. It accounted for about 63% of the open positions in decentralized perpetual futures as of Aug. 23. That's the value of outstanding positions in derivative contracts that allow investors to bet on crypto prices without an expiration date.

Hyperliquid also has a mechanism that can directly create demand for the Hyperliquid token. Part of the trading fees generated on the network goes to its Assistance Fund, which automatically uses the money to buy Hyperliquid tokens. The tokens held by the fund are then permanently removed from supply. Hence, higher trading activity can support demand for the Hyperliquid token while also reducing its supply.

However, growing trading activity does not necessarily mean the Hyperliquid trading network is making more money at the same pace. The network's gross revenue fell from about $356.7 million in the third quarter of 2025 to $201.8 million in the second quarter of 2026, a decline of roughly 43%.

Hence, investors should not assume that rising trading volume or open positions will automatically translate into similar growth in the amount of money available to buy Hyperliquid tokens and reduce its supply.

Hyperliquid Strategies needs to grow value per share

Hyperliquid Strategies increased its Hyperliquid token holdings from about 29.3 million tokens on July 30 to roughly 30.1 million tokens by Sept. 3. However, simply owning more tokens does not necessarily make each share more valuable.

The company issued 76.1 million shares at an average net issue valuation of about 15% above its NAV and used $773 million to buy 16.5 million Hyperliquid tokens in fiscal 2026 (ending June 30, 2026). Issuing shares above NAV can benefit existing shareholders if management uses the proceeds productively. On Sept. 1, the company increased the amount of stock it can sell under an existing agreement from $1 billion to $2.5 billion, giving it a greater capacity to raise money by issuing new shares.

While the company can use that money to buy more tokens, issuing more shares also means that its assets are spread across a larger number of shares. Hence, investors need to determine whether the value backing each share is increasing, rather than focusing only on the company's total Hyperliquid token holdings.

Valuation makes this even more important. Hyperliquid Strategies closed at $12.18 on Sept. 4. PurrmNAV estimated the company's adjusted NAV at about $10.25 per share. Investors were paying roughly a 19% premium to the estimated value of the assets backing each share.

In other words, investors are already paying for some of the company's expected future value creation.

Investors should not forget Bitcoin

Hyperliquid Strategies offers more ways to potentially grow investor value, but each one adds another layer of risk. Bitcoin's investment case is much simpler. Its supply is limited to 21 million coins, while its long-term value depends mostly on whether adoption continues to grow.

The company's investors need more things to go right. The Hyperliquid network must continue to attract trading activity, and enough of the money generated must benefit the Hyperliquid token. Hyperliquid Strategies must also increase the value backing each share as it raises more capital.

Investors should not sell Bitcoin simply because Hyperliquid Strategies soared in August. Hyperliquid Strategies could deliver higher returns if all these factors work in its favor. However, Bitcoin's simpler investment case makes it more suitable as a core cryptocurrency holding, while I would consider Hyperliquid Strategies a smaller, higher-risk investment.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Hyperliquid. The Motley Fool has a disclosure policy.

Costco Wholesale's (NASDAQ: COST) final sales update of its fiscal 2026 (which ended Aug. 30) shone a spotlight on a growth engine that is expanding much faster than the overall business. The company's digitally enabled comparable sales (sales initiated through a digital device and fulfilled through a warehouse or distribution center, as well as Costco Travel) rose by 20.9% year over year, more than twice the company's 8.4% total comparable-sales growth.

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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 »

Digitally enabled sales surpassed $27 billion and accounted for nearly 10% of Costco's total net sales in its fiscal 2025. Hence, the business has become large enough to influence companywide growth.

Strengthening Costco's membership model

Costco is not trying to replace its warehouses with a digital business. Instead, digital tools are giving members more ways to discover its products and shop for them.

The company's personalization efforts could make these digital interactions more valuable. In the third quarter of its fiscal 2026, personalized recommendation carousels on its online platforms converted at roughly three times Costco's typical digital rate and generated just under $500 million of e-commerce sales.

However, rapid digital growth does not automatically translate into equally strong profit growth. Costco says its digitally enabled business carries a lower gross margin than its warehouse operations. Hence, the value of the opportunity depends on whether higher engagement and improved convenience can offset the impact of that lower-margin mix.

September 2026 will be crucial

The company's digital momentum remained strong late in the fiscal year. Digitally enabled comparable sales rose 19.5% year-over-year in fiscal 2026 Q4 and 17.9% year-over-year in August 2026. However, both were lower than the digital growth rate for the fiscal year as a whole.

The stock's valuation could also prove challenging for investors. Costco is currently trading at roughly 40.8 times Wall Street's fiscal 2027 consensus earnings estimate of $22.7 per share (as of Sep. 3, 2026). Its digital growth alone cannot justify such a premium valuation.

Costco is scheduled to report its fiscal fourth-quarter earnings results on Sept. 24. The more important question that report may answer is whether rapid digital growth is also strengthening member economics and overall profitability. If Costco can keep growing the digital business at the 15% to 20% pace it has been achieving recently while preserving those metrics, it could become a meaningful growth driver in the coming years.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

Anthropic may place an unusual restriction on employee stock sales after its planned initial public offering (IPO). The company is considering requiring even its rank-and-file employees to sell shares through preset Rule 10b5-1 trading plans. Those plans are usually put in place only by members of senior leadership who want to cash in on their equity in a way that shows that they're not timing their sales based on insider information.

The 10b5-1 proposal is still being discussed. Meanwhile, Anthropic reportedly plans to release its prospectus after Labor Day, with a possible listing in late September or early October 2026.

Image source: Getty Images

A Rule 10b5-1 plan allows employees to set stock-sale instructions in advance, before they possess material nonpublic information. The trades in the plan then occur at preset times, amounts, prices, or formulas.

Anthropic may want tighter control over employee stock sales

The most obvious benefit of a 10b5-1 plan is that it reduces the risk of insider-trading violations. But Anthropic may have another reason.

Anthropic already has an unusually open internal culture. Many of its employees maintain Slack "notebooks" where they share their thoughts and work with colleagues. CEO Dario Amodei also holds companywide meetings known as "Dario Vision Quests" twice a month.

This level of transparency could become harder to maintain once Anthropic is publicly traded. Employees who regularly receive confidential information may not always know when they can safely sell stock, even during normal post-earnings trading windows.

Requiring all of its people to use preset trading plans could help solve this problem. Employees could decide well in advance when and how much stock they want to sell, before receiving information that could move Anthropic's share price. Reuters reported that these plans could allow sales outside normal trading windows, although employees would have less control over the timing and size of their individual trades.

Hence, Anthropic may be trying to preserve how freely information moves inside the company while making employee stock sales more predictable.

What this could mean for Anthropic investors

The proposal also fits with Anthropic's broader approach to pre-IPO shares. While considering allowing existing shareholders to sell stock in the IPO, the company is also weighing longer lockup periods than the customary 180 days.

This strategy could provide some liquidity up front while delaying the timing of when a larger pool of shares becomes available for trading. Preset Rule 10b5-1 plans could then make later employee sales more structured.

The recent example of Space Exploration Technologies (NASDAQ: SPCX), also known as SpaceX, highlights the need to consider the scheduling of share releases. The company's first lockup expiration in August more than doubled the number of shares available to be publicly traded. Another 12.9 billion shares are scheduled to unlock by mid-2027.

Anthropic stock may not follow the same path. However, it shows how quickly share supply can increase after an IPO, which can have a major impact on share prices even when nothing has changed in the underlying business.

An employee selling under a preset plan should also not automatically be viewed as bearish. A scheduled sale reveals less about an employee's current view of Anthropic than a discretionary sale made at the same moment.

However, there is one limitation for investors: Companies must disclose in quarterly filings when directors or officers adopt or terminate Rule 10b5-1 plans. Ordinary employees' plans are not subject to the same quarterly disclosure requirement.

Hence, Anthropic could make employee selling more structured without giving investors the same visibility into all planned sales. The eventual lockup schedule and the amount of stock becoming eligible for sale may therefore matter more than the simple fact that employees are selling.

Manali Pradhan, CFA 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.

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.

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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.

I get cautious when an artificial intelligence (AI) stock asks investors to pay today for profits that may not show up for years.

Nvidia (NASDAQ: NVDA) has been the dominant player in AI hardware for some time, but its stock still deserves a closer look even after gaining more than 360% over the past three years (as of Sept. 2, 2026). Is Nvidia stock now priced for distant hopes, or is it one of the tech sector's rare exceptions?

Image source: Getty Images.

Nvidia is already making huge profits from AI

Nvidia's results for its fiscal 2027 second quarter (which ended July 26) show how much the company is already benefiting from AI infrastructure spending. The company's revenue rose 106% year over year to $96.2 billion. The performance was mainly driven by the data center segment, where revenue increased 117% year over year to $89 billion. The company also generated $63.7 billion in generally accepted accounting principles (GAAP) operating income during the quarter. This pace of growth is particularly impressive considering Nvidia's massive size.

Nvidia is also converting a large portion of its revenues into cash. The company's free cash flow reached $69.9 billion, while the company returned roughly $46 billion to shareholders through share repurchases and dividends in the first half of its fiscal 2027. This shows that Nvidia has significant funds to invest in research and development, secure future supply, and return capital to shareholders.

However, strong cash generation does not automatically make Nvidia's valuation attractive. The stock trades at roughly 25 times analysts' consensus estimate for fiscal 2027 earnings of $9.26 per share. But the multiple falls to around 15 times based on the analysts' fiscal 2028 earnings estimate of $15.59 per share. Hence, I believe that the attractiveness of Nvidia's valuation depends significantly on whether the company can deliver the growth Wall Street currently expects.

Nvidia is expanding beyond GPUs

Nvidia's big upcoming growth driver is the Vera Rubin system, which is already in production. Management expects the new platform to account for about 20% of data center segment revenue in the third quarter. Nvidia has also received purchase orders for Vera Rubin from every major hyperscaler, AI cloud provider, and equipment manufacturer.

Nvidia estimates that its revenue opportunity for every gigawatt (a measure of power capacity) of AI infrastructure has increased from around $18 billion with its Hopper GPUs to $25 billion with its Blackwell systems and $40 billion with the Vera Rubin platform. Vera Rubin includes not only Rubin GPUs, but also Nvidia's Vera CPUs, NVLink high-speed interconnect technology, and InfiniBand or Ethernet networking. By selling more parts of the overall computing system, Nvidia can generate more revenue per data center.

Demand also remains strong. Nvidia gave preliminarily guidance saying it expects revenue to grow by about 70% in fiscal 2028, despite its production capacity being supply-constrained. Management said customer forecasts indicate that demand could support around 100% revenue growth for fiscal 2028.

Nvidia still faces significant risks

But I will also give due attention to the company's risks. Nvidia has warned that shortages of land, power, and other data center infrastructure could delay customer deployments of its hardware.

Nvidia's growth will also depend heavily on whether its customers can earn attractive returns from their massive AI infrastructure investments. There are encouraging signs. Microsoft's Azure revenue grew 43% year over year in the fourth quarter of its fiscal 2026 (which ended June 30), while Amazon Web Services' net sales increased 37% year over year in the second quarter. Alphabet's Google Cloud revenue also surged 82% year over year in the second quarter, driven by strong demand for AI infrastructure and AI solutions.

While these growth rates suggest that AI infrastructure spending is already helping cloud companies, they do not yet prove that the huge amounts being invested in new AI capacity will generate sufficiently high returns over time to justify the outlays.

Nvidia is also making increasingly large financial commitments to support future demand. As of the end of its latest quarter, the company had $366 billion in future spending commitments, including $279 billion related to supply and capacity. Nvidia has also guaranteed up to $108.5 billion, including a $105 billion guarantee related to a data center project for OpenAI. These commitments increase the company's downside exposure if AI infrastructure demand slows or if its customers face difficulties funding their projects.

Margins are another factor to watch. Nvidia reported a 75% gross margin in the second quarter. But management expects margins of 71% to 72% in the fourth quarter and 72% to 73% in fiscal 2028, due to pressure from higher memory prices.

Overall, my view is that Nvidia stock is not cheap based on a risk-reward analysis, but its share price is much better supported by the company's current earnings and cash flow than most AI stocks.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

Historically, September has been a difficult month for Wall Street. The S&P 500 has fallen by an average of about 1.1% during the month from 1926 through 2024. Yet Nvidia (NASDAQ: NVDA) stock has gained ground in seven of the past 10 Septembers, with a median return of about 1.5%. Hence, while the September Effect may offer a reason for some caution around the overall stock market, it hasn't been such a negative indicator for Nvidia's stock.

And recently, CEO Jensen Huang also gave investors a potentially more important signal. He said Nvidia expects revenue to grow about 70% in its fiscal 2028, which begins Jan 31, 2027. But management says even that forecast doesn't reflect the full scope of demand for its offerings; it's constrained by the limited supply of components required to build its artificial intelligence (AI) platforms.

Nvidia CEO Jensen Huang. Image source: Nvidia.

Nvidia's visibility into future demand is sharpening

In its fiscal 2027 second quarter (which ended July 26), Nvidia's revenue soared by 106% year over year to $96.2 billion, including $89 billion in sales from the data center segment. However, management's long-term outlook was even more impressive.

Wall Street analysts had previous expected the company to deliver fiscal 2028 revenue of about $570 billion, translating to growth of roughly 44%. Nvidia's guidance, however, implies revenue of close to $700 billion.

CEO Jensen Huang said that Nvidia has never offered revenue guidance for a full year in advance before. However, this time, the company has much better visibility into memory and manufacturing capacity, as well as the land, power, and data-center infrastructure needed to deploy its products. Some of this infrastructure needs to be secured two to three years in advance.

Supply constraints could limit Nvidia's fiscal 2028 growth

CFO Colette Kress highlighted that customer forecasts currently indicate Nvidia's revenue may double next year. Huang also said Nvidia's revenue growth could be "a lot higher" if the company were not supply-constrained.

Nvidia exited the fiscal second quarter with $279 billion of supply and capacity commitments, up sequentially from $119 billion. These commitments are primarily related to memory purchases and manufacturing capacity. Of that total, $92 billion is scheduled for the rest of fiscal 2027, $87 billion for fiscal 2028, and $88 billion for fiscal 2029.

Nvidia's largest customers are also continuing to spend heavily on AI infrastructure. Amazon (NASDAQ: AMZN) Web Services plans to deploy another 2 million Nvidia GPUs in calendar years 2027 and 2028. Nvidia also expects the combined capital expenditures of the top five hyperscalers to approach $800 billion in 2026 and $1.3 trillion in 2027.

The demand trends look impressive, even when the company is not factoring any data center compute revenue from China into its current outlook. Hence, a meaningful recovery of its position in the Chinese market is not currently part of Nvidia's growth expectations.

Nvidia's revenue opportunity per AI data center is expanding

Nvidia is also expanding its revenue opportunity from each gigawatt (power capacity) of AI infrastructure. Management estimates that this opportunity has increased from roughly $18 billion with Hopper GPUs to $25 billion with Blackwell systems and $40 billion with Vera Rubin systems. These increases are partly a result of the fact that Nvidia is selling more components of the overall AI system, including CPUs, GPUs, NVLink (Nvidia's high-speed technology for connecting GPUs and other processors), and other networking products. Hence, the company benefits not only from the construction of more AI data centers, but also because it is generating more revenue per gigawatt of new capacity deployed.

Increasing adoption of agentic AI could further drive demand for compute capacity. Huang said AI agents can require roughly 15 to 100 times more compute than direct human use of AI, depending on the task. These agents can also run continuously and interact with other agents. Hence, future demand for Nvidia's wares may increasingly depend on the actual use of AI applications rather than on the computing power required to train AI models.

Nvidia's growth outlook also comes with risks

Nvidia, however, has warned that customer demand forecasts can prove inaccurate. Its customers may also delay purchases because of constraints related to data center infrastructure or capital availability. In such a scenario, Nvidia's large commitments to its own suppliers could result in higher costs.

Nvidia is also providing support for some large AI infrastructure projects. In August, the company agreed to provide guarantees of up to $105 billion for a data center project in Ohio. That campus will exclusively host Nvidia computing systems under 20-year leases to OpenAI. Huang also said AI labs for which Nvidia expects to use its balance sheet could account for roughly one-quarter of the company's business in fiscal 2028.

Rising memory costs could also pressure profitability. Nvidia expects its gross margins to fall from 75% in the fiscal second quarter to around 71% to 72% in the fiscal fourth quarter, before improving to around 72% to 73% in fiscal 2028. Management attributed much of this pressure to sharp increases in memory prices.

Nvidia's stock also faces near-term pressure. On Sept. 1, rising Treasury yields and oil prices pushed the Nasdaq Composite down by 1%. Besides these marketwide risks, Nvidia is also facing concerns about some of its AI financing arrangements. Its stock slipped by 1.5% during the session.

September could still bring volatility for Nvidia investors. However, it is obvious that Nvidia now has much greater visibility into demand several years ahead. If that visibility holds, short-term weaknesses could matter far less than the scale of the growth opportunity the company is preparing for.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.

Anthropic has confidentially filed for an initial public offering (IPO) and reportedly plans to release its prospectus after Labor Day. The company is considering allowing existing shareholders to sell shares in its IPO. However, it is not clear whether those sellers would be early investors, employees, executives, or a combination of the three.

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 »

Anthropic is also considering lockup periods longer than the customary 180 days for shares that are not sold in the IPO. Hence, the combination could allow some existing shares to enter the public market initially while delaying when a much larger pool of pre-IPO shares becomes available for sale.

Why Anthropic may want more shares available initially

An IPO can include new shares that raise cash for the company, or existing shares sold by shareholders. The latter do not add new shares outstanding.

Space Exploration Technologies, also known as SpaceX, has already demonstrated why this could matter. Only around 5% of its shares were available for public trading after its June IPO. Another 911.5 million shares became eligible to trade after its first lockup expired in August 2026. This has more than doubled its public float (shares available for public trading). Scheduled lockup releases could make as much as 40% of SpaceX's shares potentially tradable by Dec. 8.

Anthropic may take a different approach by allowing some existing shares to be sold in the IPO and locking the remainder for longer. The company is also reportedly considering preset Rule 10b5-1 (prearranged plans that set when and how employees can sell shares) trading plans for rank-and-file employees (employees who are not senior managers or executives). These plans would make future employee sales more predetermined, although they would not themselves restrict how many shares become eligible for trading.

Anthropic also tightly restricts its private shares (shares in a company that is not yet publicly traded), and transfers without board approval are considered void. The company gave employees an option to sell up to $5 billion to $6 billion of shares at a roughly $350 billion valuation earlier this year. However, employees ultimately sold fewer shares than investors wanted to buy. Hence, offering liquidity does not necessarily mean shareholders are rushing for the exits.

Anthropic's IPO structure matters

SpaceX and Cerebras Systems did not have existing shareholders sell shares in their IPOs. Both instead issued new shares, while pre-IPO shareholders could sell later as lockup restrictions were released. Cerebras sold 34.5 million shares itself and raised about $6.2 billion net.

Anthropic has already raised at least $130 billion to support its huge computing needs. The company's IPO could also reportedly exceed the roughly $86 billion raised by SpaceX. However, Anthropic may receive less cash than the headline IPO size suggests, because proceeds from secondary shares go to the shareholders selling them. Hence, the primary-versus-secondary mix will be important. Secondary shares could increase the initial public float, while longer lockups delay when more shares become available for trading.

Employee selling cannot be viewed as inherently negative. Employees may sell for taxes or diversification. Caution becomes warranted if founders or senior executives sell large portions of their holdings, or if secondary shares dominate the offering despite Anthropic's capital needs.

The prospectus should reveal whether Anthropic's IPO is mainly about raising fresh capital or providing liquidity to existing shareholders. It should also show how much stock could become available for sale later.

Manali Pradhan, CFA 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.

Micron Technology (NASDAQ: MU) will report its fiscal 2026 fourth-quarter earnings results on Sept. 30. While the report could move Micron's stock significantly, the Federal Reserve's next interest rate decision, scheduled for Sept. 16, could have an even bigger impact. Wall Street now sees a more than 60% chance of an interest rate hike in September 2026, up from 41.4% a week earlier. The shift followed Federal Reserve Chairman Kevin Warsh's hawkish comments at the Jackson Hole symposium.

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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 »

Micron has already guided for exceptionally strong Q4 results. However, the bigger question for investors is how long the memory boom can persist.

Strong earnings performance

Micron's Q3 results were exceptionally strong. Revenue surged 346% year over year to $41.5 billion, while operating cash flow was $25.4 billion. Management expects Q4 revenue of $49 billion to $51 billion and non-GAAP earnings per share (EPS) of $30 to $32.

Micron's growth is being driven heavily by higher pricing. DRAM (dynamic random-access memory) revenue rose 343% year over year to $31.3 billion, while NAND revenue soared 361% year over year to $9.9 billion in Q3. DRAM prices rose in the low-60% range sequentially, and NAND prices jumped in the mid-80% range as tight supply gave memory makers enormous pricing power.

The memory shortage is not confined to high-bandwidth memory (HBM) or artificial intelligence (AI) data centers. Micron's Mobile and Client business generated $11.5 billion in Q3 revenue and an 87% gross margin. This shows that favorable memory pricing is benefiting other parts of the business as well.

Higher rates may not directly weaken Micron's business

An interest rate hike will not suddenly create more DRAM or HBM supply, nor is it likely to stop AI spending immediately. Nvidia expects roughly 70% revenue growth in fiscal 2028. SK Hynix expects the memory shortage could last through 2030.

Micron is also trying to make this memory cycle less volatile than previous ones. The company's new strategic customer agreements require customers to commit to specific purchase volumes over several years. Most of these contracts either have fixed prices or set minimum and maximum prices. Micron also claims that even at the minimum prices, contracts with these pricing ranges should generate gross margins well above the company's peak quarterly margins in any previous memory cycle.

These agreements should also strengthen Micron's financial position. The company expects $22 billion of customer deposits and related financial commitments under the agreements, including about $18 billion in cash deposits. Micron also exited Q3 with $30.1 billion of cash and marketable investments and just $5.7 billion of debt.

Hence, higher interest rates are unlikely to hurt Micron primarily through its own borrowing costs.

Investors may perceive more risk

Micron is trading at roughly 6.2 times Wall Street's fiscal 2027 consensus earnings estimate of $155 per share (as of Aug. 31, 2026).

The low valuation multiple implies that investors are still not valuing Micron as a typical high-growth AI stock. Instead, the valuation suggests that investors remain concerned about whether today's extraordinary memory profits will last. This is driving the September risk for Micron.

Assume Wall Street raises its fiscal 2027 earnings estimate by 10%. If Micron continues trading at the same earnings multiple, the stock could rise by roughly the same amount. But if a more hawkish-than-expected Federal Reserve decision causes the forward-earnings multiple to fall by 10%, almost all that benefit disappears. A 15% decline in the multiple would leave the stock lower even after the 10% increase in expected earnings.

Hence, the Federal Reserve does not need to weaken Micron's near-term results to hurt the stock. It only needs to make investors less confident that today's strong memory profits can last.

What September could reveal about Micron

History also suggests that higher interest rates alone may not determine Micron's performance. During its last major downturn, the memory market itself weakened sharply as customers reduced inventories and DRAM and NAND prices fell. Micron's revenue dropped 49% year over year, while gross margin fell year over year from 45% to negative 9% in fiscal 2023 (ending Aug. 31, 2026).

Hence, September 2026 could prove an interesting test. Memory pricing is currently rising rather than falling, and demand remains constrained by tight supply. If a hawkish Federal Reserve decision pushes interest rates higher and causes investors to question how long today's strong memory pricing can last, Micron's stock could fall even if the company later reports another strong quarter.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.

Historically, September has been on average the worst month of the year for stocks, with the S&P 500 (SNPINDEX: ^GSPC) declining by an average of 1.16% in September from 1926 through 2024. But historical trends do not mean that stocks will necessarily fall in September 2026.

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 »

However, several events could make markets volatile, including the August jobs report coming out on Sept. 4 and the U.S. Federal Reserve's next meeting on Sept. 15 and 16. High inflation, massive and rising government debt, and elevated geopolitical tensions have also increased uncertainty in the stock market. If any of these factors help trigger another sell-off in speculative technology stocks, quantum computing stocks could be among the hardest hit.

When tech stocks sell off, quantum computing stocks sell off harder

A review of daily stock price data shows that through Aug. 28, there were 23 trading days in 2026 when the Invesco QQQ Trust (NASDAQ: QQQ) fell at least 1.5%. QQQ, an exchange-traded fund that tracks the Nasdaq-100, declined by an average of about 2% on those days.

However, the median return for IonQ (NYSE: IONQ), D-Wave Quantum (NASDAQ: QBTS), Rigetti Computing (NASDAQ: RGTI), and Quantum Computing Inc. (NASDAQ: QUBT) was worse than the QQQ on 17 of those 23 trading days -- about 74% of the time.

In short, quantum computing stocks have tended to decline more sharply than the tech sector during broader technology sell-offs in 2026.

Quantum computing investors are paying heavily for future growth

The biggest risk for quantum computing stocks is their high valuations, even compared to other types of risky technology stocks. Software companies such as C3.ai (NYSE: AI) and BigBear.ai (NYSE: BBAI) are also losing money and depend on future growth, but they trade at 6.9 times and 10.1 times forward sales, respectively.

IonQ has stronger commercial traction than most pure-play quantum computing companies. Its revenue jumped 287% year over year to $80.1 million in the second quarter. Its remaining performance obligations (RPO), a measure of contracted revenue that has not yet been recognized, rose 297% year over year to $485 million. Management now expects revenues for 2026 in the range of $280 million to $290 million, up from the previous guidance range of $260 million to $270 million.

Despite this solid performance, IonQ is trading at nearly 52 times forward sales. Hence, the stock is already pricing in significant anticipated future growth, leaving less of a cushion if it has execution problems, or if investors become more cautious about speculative technology stocks.

Rigetti Computing's valuation looks even more demanding. It trades at more than 223 times forward sales. Rigetti Computing generated only $5.1 million in revenue in the second quarter while posting a $28.1 million operating loss.

D-Wave Quantum trades at nearly 148.8 times forward sales. The company's second-quarter revenue was only $3.1 million. However, there are signs that demand is improving. The company's remaining performance obligations were up 668% year over year to $40.7 million, while bookings in the first half of 2026 rose 1,120% year over year to $35.5 million.

Hence, quantum computing technology need not fail for these stocks to fall. Although the companies may continue to make commercial progress, investors could simply become less willing to pay such high valuations for revenue that's expected much further in the future.

Why the recent sell-off does not remove the risk

Quantum computing stocks have already witnessed a sharp correction. IonQ is down almost 53.7% from its 52-week high, while D-Wave Quantum is down about 63.7%. Rigetti Computing and Quantum Computing Inc. have fallen even more, by roughly 73.2% and 68.5%, respectively, from their 52-week highs (as of Aug. 28).

Many of these companies have strong balance sheets. Rigetti Computing and D-Wave Quantum exited the second quarter with $541.3 million and $546.2 million in cash and marketable investments on their books, respectively. IonQ reported around $3 billion in cash, cash equivalents, and investments at the end of the second quarter, before adjusting for its SkyWater acquisition. These large cash balances reduce the companies' near-term financing risks.

However, that does not mean the stocks cannot fall further. Rigetti Computing can see its valuation compress from more than 200 times forward sales. Similarly, IonQ can continue reporting strong revenue growth while investors become less willing to pay around 52 times forward sales. The recent correction may have reduced their stock prices, but it has not removed their valuation risk. These companies are still heavily dependent on the premise that they will experience a great deal of future commercial growth to justify their current valuations.

The clearest sign that this prediction is not playing out would be if quantum stocks stop underperforming the Nasdaq-100 during broader technology sell-offs. Until then, their performance in 2026 suggests that they remain particularly vulnerable when investors move away from speculative technology stocks.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends IonQ. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.

I've covered semiconductor stocks for five years, and heading into 2027, Nvidia (NASDAQ: NVDA) would be my top pick if I could buy just one.

Nvidia continues to hold a dominant position in the artificial intelligence (AI) accelerator market. The company's revenue soared 106% year over year to $96.2 billion in the second quarter of fiscal 2027 (ending July 26). Management now expects revenue to grow by around 70% year over year in fiscal 2028.

But Nvidia's biggest advantage heading into calendar year 2027 may be that it is finding more ways to make money from every AI data center.

Image source: Getty Images.

Nvidia has expanded beyond GPUs

Management estimates that Nvidia's revenue opportunity for every gigawatt of AI infrastructure has increased from around $18 billion with Hopper GPUs to $25 billion with Blackwell systems and $40 billion with Vera Rubin systems. This increase partly reflects Nvidia's expanding presence in CPUs, networking, and other hardware needed to build complete AI data centers.

Nvidia is rapidly gaining ground in these newer businesses. According to IDC, Nvidia's data center Ethernet switching revenue grew 192.7% year over year to $2.1 billion in the first quarter of calendar year 2026. Nvidia accounted for 21.5% share of the data center Ethernet switch market. The company's networking revenue also rose 18% sequentially, with Spectrum-X Ethernet revenue increasing 2.6 times year over year in the second quarter.

Nvidia's server CPU business is also gaining momentum. The company's Grace CPU revenue exceeded $5 billion on a trailing-12-month basis, while the next-generation Vera CPU was already in full production at the end of the second quarter. Management continues to see around $20 billion in total server CPU demand and preliminarily expects CPU revenue to more than double in fiscal 2028.

Advanced Micro Devices and major cloud providers are developing competing AI accelerators, so Nvidia may not retain its current share of the accelerator market. But that does not necessarily mean its AI revenue opportunity will shrink. Hence, I think investors should focus less on Nvidia's GPU market share alone and more on how much of each AI data center the company can monetize.

Nvidia's growth is impressive for its size

Nvidia is growing revenues at an impressive pace despite its already massive size. The company is guiding for third-quarter revenue of $108 billion, plus or minus 2%, implying year-over-year growth of roughly 89% at the midpoint.

Additionally, Nvidia's longer-term growth outlook is also limited by supply rather than demand. Management said its fiscal 2028 revenue outlook is supply-constrained and that customer forecasts indicate even faster growth. Nvidia expects supply to remain a bottleneck through the end of fiscal 2028.

Nvidia is also moving quickly to its next product generation. The company began production shipments of Vera Rubin systems in August 2026. The company has also received purchase orders from every major hyperscaler, AI cloud, and system manufacturer. Management expects Vera Rubin to account for around 20% of data center revenue in the third quarter.

I think this matters because major product transitions can create execution risks for semiconductor companies. Nvidia, however, is ramping up Vera Rubin while demand for Blackwell remains strong among hyperscalers. As a result, the company's size does not yet appear to be slowing its growth.

Nvidia's valuation appears reasonable

I like several other semiconductor stocks, including Broadcom, Taiwan Semiconductor Manufacturing, and Advanced Micro Devices. However, Nvidia still offers the combination of scale, growth, and valuation I prefer heading into 2027.

Nvidia was trading at around 23.2 times analysts' expected fiscal 2027 adjusted earnings per share (EPS) of $9.05 and nearly 16 times expected fiscal 2028 EPS of $13.13, as of Aug. 26. While the stock is not exactly cheap, I still find it difficult to call it excessively expensive when management expects revenue to grow by around 70% in fiscal 2028 and demand continues to exceed available supply.

A risk that cannot be ignored

Nvidia has made significant commitments to secure primarily memory and manufacturing capacity for current and future data center products. The company's supply and capacity commitments increased from $119 billion at the end of the first quarter to $279 billion at the end of the second quarter of fiscal 2027. However, some of these agreements can be canceled, rescheduled, or adjusted before firm orders are placed.

The strategy makes sense while customers want more AI infrastructure than Nvidia can supply. However, it also makes correctly forecasting future demand increasingly important. If AI spending slows unexpectedly, Nvidia could end up with more supply commitments than it needs.

But for now, I don't see evidence of that slowdown. Nvidia does not need to win every part of the semiconductor market for the stock to work. It needs to keep increasing the revenue it generates from each AI data center while converting that growth into profits.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Meta Platforms (NASDAQ: META) is once again releasing some of its artificial intelligence (AI) models with open weights, allowing developers to download and modify them.

The company released Muse Glimmer, a 30-billion-parameter model, on Aug. 10. However, as of Aug. 25, the company had not yet released the weights for its more powerful flagship model, Muse Spark 1.2.

So, does Meta Platforms' heavy investment in AI infrastructure make sense if it plans to make more of its AI models publicly available?

Image source: Getty Images.

Earning money from AI without selling models

Unlike OpenAI and Anthropic, Meta Platforms does not need to rely primarily on subscriptions, application programming interfaces (APIs), and enterprise software to monetize its AI models directly. Instead, the company is leveraging AI to improve recommendations and advertising across Facebook and Instagram. The company is also developing business messaging and AI-agent opportunities through WhatsApp and Messenger.

Meta Platforms' AI strategy is already showing results. In the second quarter (ended June 30), improvements to its AI models generated an 8.3% increase in Facebook ad clicks and a 15.7% rise in ad conversions. Additionally, an early Instagram AI pilot increased the number of users completing targeted in-app actions by 1%.

Heavy investment

Meta Platforms' revenue grew 28% year over year to $60.8 billion, while operating cash flow was $31.9 billion in the second quarter. With the company's capital expenditures reaching $31.1 billion, free cash flow was only $784 million. Meta Platforms now expects $130 billion to $145 billion in capital spending in 2026, up from its initial $115 billion to $135 billion range.

Meta Platforms' spending commitments also extend well beyond 2026. The company had $81.6 billion of noncancelable contractual commitments due in 2027, mostly associated with cloud capacity and investments in technical infrastructure, data centers, and Reality Labs hardware. The company also entered into another $68 billion in data center leases, expected to begin in 2027 and 2028.

Meta Platforms' high spending could also weigh on future profit margins. Depreciation expense associated with property and equipment rose 40% year over year to $6 billion in the second quarter. Construction in progress also reached $80.3 billion, with most of those costs related to data centers, servers, and network infrastructure. As those assets come online, depreciation expenses could rise further, putting pressure on operating margins.

Reasonable valuation

Meta Platforms is currently trading at around 16.8 times analysts' expected 2027 earnings per share of $33.9 (as of Aug. 25). The valuation appears reasonable, considering the company may not need significant user growth for its AI investments to pay off. With 3.6 billion people already using Meta Platforms' apps daily, even relatively small improvements in user engagement and ad conversion can potentially translate into meaningful revenue gains.

However, this advantage has a limit. Much of the growth in the number of ads Meta shows is coming from lower-monetization markets such as Asia-Pacific. Hence, local-language business agents are particularly important, since they may help the company generate more revenue from users in markets where advertising currently monetizes at lower rates.

So, AI needs to continue lifting revenue per user while capital spending and depreciation eventually moderate. Meta Platforms' forward earnings multiple leaves room for upside. But if AI spending remains elevated without a corresponding improvement in advertising monetization, the stock may struggle to grow.

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

Cerebras Systems (NASDAQ: CBRS) and Space Exploration Technologies (NASDAQ: SPCX), known as SpaceX, are two prominent companies that went public in 2026. Cerebras started trading on May 14, while SpaceX followed on June 12.

Cerebras builds wafer-scale artificial intelligence (AI) systems (computers built around a single large processor) and sells access to its computing power through the cloud. SpaceX operates reusable rockets, the Starlink satellite network, and an AI segment that includes the Grok large language model and AI computing infrastructure.

Image source: Getty Images.

Cerebras is much smaller than SpaceX in terms of market capitalization. However, its cloud revenue is growing rapidly at a time when more AI spending is shifting from training models toward inference or running them in production.

SpaceX has already generated nearly $2.6 billion in revenue from the AI business in the second quarter of fiscal 2026 (ending June 30). But it also has its profitable Starlink-driven Connectivity business to help fund that expansion.

Hence, the key question is whether Cerebras' faster growth potential can outweigh SpaceX's greater financial strength over the next five years.

Cerebras could benefit more as AI spending shifts to inference

Gartner expects global spending on AI inference to reach $23.3 billion in 2026, overtaking the $19 billion spent on training. Inference is expected to account for 59% of AI-optimized cloud infrastructure spending by 2027.

Cerebras is already benefiting from this trend. The company's non-GAAP (generally accepted accounting principles) cloud and services revenue jumped 287% year over year to $127.7 million in the second quarter (ending June 30). Total non-GAAP revenue (core revenue) was up 103.3% year over year to $209.9 million, ahead of management's non-GAAP revenue guidance of around $194 million.The company also raised full-year core revenue guidance to $880 million to $890 million, up from the previous outlook of $855 million to $865 million.

However, Cerebras is exposed to customer concentration risk. Three customers accounted for about 76% of the company's second-quarter revenue. Additionally, while Cerebras had $25.4 billion in remaining performance obligations (RPO) at the end of the second quarter, only 22% is expected to be recognized as revenue over the two years ending June 2028.

SpaceX can fund its AI expansion more easily

SpaceX's Connectivity segment generated around $4.3 billion of revenue and roughly $1.7 billion of operating income in the second quarter (ending June 30). This profitable business provides SpaceX with an important source of revenue to support its AI expansion.

However, the AI segment posted an operating loss of around $1.3 billion while consuming $15.8 billion of capital expenditures during the quarter. Management expects SpaceX to reach a $100 billion annualized revenue run rate by December 2026, but achieving that target will require enormous investment.

Which is the better AI-powered pick?

Cerebras is currently trading at around 14.9 times analysts' expected 2027 revenue of $2.95 billion. SpaceX is even more expensive at roughly 17.4 times analysts' expected 2027 revenue of $105.47 billion (as of Aug. 24).

While SpaceX clearly has the stronger financial base, the company's AI expansion is already extremely capital-intensive. Cerebras appears to offer the better five-year risk-reward balance. The risk is much higher, particularly because of customer concentration and the long timeline for converting its RPO into revenue. But if Cerebras can scale capacity while improving margins, its growth could justify that risk.

Manali Pradhan, CFA 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.

Nvidia (NASDAQ: NVDA) CEO Jensen Huang saw an investment opportunity during the sharp global sell-off in technology stocks in June. Speaking to reporters in Seoul on June 8, Huang said that investors should be happy because they could now "buy at a discount." He also asserted again that the artificial intelligence (AI) infrastructure build-out was still in its early stages.

Nvidia's stock performance alone doesn't tell the whole story. The company's shares are up by around 2.2% since his comments, trailing the S&P 500's gain of about 3.1% over the same period (as of Aug. 21).

So, was Nvidia attractively valued during the sell-off, and does some of that discount still exist after the recent share price gains?

Nvidia CEO Jensen Huang. Image source: Nvidia.

Nvidia looked reasonably valued during the sell-off

Nvidia's business was still growing rapidly even as its stock price fell. The company had reported earnings results for its fiscal 2027 first quarter (which ended April 26) just three weeks before these comments. In the period, Nvidia's revenue soared 85% year over year to $81.6 billion, with data center revenue surging 92% to $75.2 billion. However, the stock had fallen roughly 13% from its May 14 closing price to June 5, the last trading day before Huang made those comments.

Around that time, the consensus on Wall Street was that Nvidia would earn $8.93 per share in its fiscal 2027 and $12.67 in its fiscal 2028. Based on its June 8 opening price of $210.18, the stock was trading at about 23.5 times fiscal 2027 earnings and just 16.6 times fiscal 2028 earnings. Those multiples appear reasonable for a company whose revenue had just grown 85% and whose largest customers were still struggling to secure enough AI computing capacity.

Now, analysts expect earnings of $9.01 per share in fiscal 2027 and $13 per share in fiscal 2028. At Nvidia's closing price of $214.72 (as of Aug. 21, 2026), the stock trades at roughly 23.8 times fiscal 2027 earnings and 16.5 times fiscal 2028 earnings. Hence, while Nvidia's stock has risen, Wall Street's earnings expectations have increased in parallel.

Nvidia still looks attractive

Nvidia's ability to convert AI demand into cash also supports its valuation. The company generated $48.6 billion in free cash flow in its first quarter while spending only about $1.8 billion on property, equipment, and intangible assets. However, Nvidia still had $119 billion of manufacturing, supply, and capacity commitments at the end of the first quarter, reflecting the large amounts it has committed to secure future production.

Yet Nvidia remains in an attractive position because customers and partners bear much of the cost of building the data centers and physical infrastructure needed to run its chips. The four major hyperscalers -- Amazon, Microsoft, Meta Platforms, and Alphabet -- are expected to spend a combined $730 billion on AI infrastructure in 2026.

However, Huang's call hasn't passed its biggest test yet. Nvidia has not reported quarterly results since he made those comments. It is scheduled to release its fiscal second-quarter results on Aug. 26. Nvidia has guided for revenue in a range of $89.2 billion to $92.8 billion.

Hence, the stock could remain a smart pick for long-term investors if there's significant earnings growth to drive Nvidia's share price higher.

Manali Pradhan, CFA has no position 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.

Advanced Micro Devices (NASDAQ: AMD) plans to invest more than $10 billion in Taiwan. But this does not mean that Taiwan Semiconductor Manufacturing (NYSE: TSM) will be the only beneficiary.

Instead, the money will go across Taiwan's broader semiconductor ecosystem, including advanced packaging, chip substrates (the base materials used in advanced chip packaging), and manufacturing capacity for complete artificial intelligence (AI) systems. These investments are expected to run through 2029 and help its partners scale production of next-generation products such as its Helios AI racks.

Hence, CEO Lisa Su is investing now to ensure AMD can manufacture enough hardware if its rapidly growing AI demand translates into large-scale deployments.

Image source: Getty Images

AMD's next AI bottleneck may not be the GPU

AMD's new Venice EPYC server CPU is already ramping production using TSMC's advanced 2-nanometer process technology. The company also uses TSMC's SoIC-X and CoWoS-L advanced packaging technologies for some of its AI and data center chips.

The chipmaker is also expanding its supplier ecosystem beyond TSMC. The company is developing next-generation Elevated Fanout Bridge (EFB) chip packaging with ASE Technology and Siliconware Precision Industries. The company has completed testing of a panel-based version of its EFB packaging technology with Powertech Technology. AMD is also working with Taiwanese substrate suppliers and manufacturers that will help produce Helios AI systems at high volume.

The extra capacity could be critical. In July 2026, TSMC CEO C.C. Wei claimed that tight advanced-packaging capacity was limiting customers' growth. AMD could therefore win AI customers but still miss sales if it cannot package and assemble enough chips.

Need to expand manufacturing capacity

Data Center revenue reached increased 107% year-over-year to $6.7 billion in the second quarter. This business accounted for about 58% of AMD's total revenue. Management expects Data Center revenue to grow at a compound annual growth rate (CAGR) of above 60% over the next three to five years, including CAGR of more than 80% for data center AI.

AMD will need a much larger supply chain if it comes close to those growth targets. A Helios AI rack contains 72 Instinct MI455X GPUs and 18 Venice CPUs. Meanwhile, OpenAI, Meta Platforms, and Anthropic have announced AMD deployments that could total as much as 14 gigawatts. However, those deployments will occur over several years.

Being fabless no longer means being capital-light

AMD purchased only $1.2 billion of property and equipment during the first half of 2026. Yet, the company exited the second quarter with $30.3 billion of broader unconditional commitments, primarily covering wafers, substrates, components, cloud capacity, software, and technology licenses. AMD also recorded a roughly $1 billion increase in prepaid expenses and other assets, mainly due to advance payments under supply agreements in the first half of 2026.

Hence, while AMD does not operate chip manufacturing factories, it still needs to commit significant capital to secure supply.

The added manufacturing capacity will matter only if it leads to profitable AI growth. AMD's non-GAAP operating margin was 27% in the second quarter, significantly lower than the management's target of more than 35% over the next three to five years. CEO Lisa Su is spending billions to make sure AMD can produce enough AI hardware if customer demand grows as expected.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Sandisk (NASDAQ: SNDK) has been a major beneficiary of the favorable environment for NAND memory. Just look at the numbers.

The company's revenue rose 51% sequentially to nearly $9 billion in the fourth quarter of fiscal 2026 (which ended July 3), while non-GAAP gross margin increased by 6.2 percentage points sequentially to 84.6%. Approximately two-thirds of that sequential revenue growth came from higher NAND memory prices, while only one-third came from selling more NAND.

Against this backdrop, what could Sandisk stock look like five years from now?

Image source: Getty Images

This NAND cycle could be different

Artificial intelligence (AI) is already becoming a bigger part of Sandisk's business. The company's data center revenue rose 103% sequentially to $3 billion in the fourth quarter. Datacenter products made up 38% of Sandisk's NAND shipments by storage capacity in the fourth quarter, compared with 12% a year earlier.

Sandisk is also locking in future demand. Sandisk's long-term customer contracts are worth at least $93.9 billion based on their minimum pricing terms. They also cover more than half of the NAND volume expected in fiscal 2027 and about two-thirds of the expected fiscal 2028 volume.

Management expects annual revenue growth in the mid-to-high teens from fiscal 2028 through fiscal 2030. The company also expects non-GAAP gross margins of roughly 80% and adjusted free cash flow equal to about 50% of revenue during this period.

The margin target is especially important. If strong AI demand and long-term contracts help keep margins high, Sandisk could remain very profitable even if NAND prices fall.

Where could Sandisk stock be in 2031?

Analysts currently expect Sandisk to generate about $49.1 billion in revenue in fiscal 2027. From there, assume 17% annual revenue growth from fiscal 2028 through fiscal 2030, roughly in line with the midpoint of management's mid-to-high-teens growth target. As Sandisk's revenue base grows larger, assume a slightly slower year-over-year revenue growth of 15% for fiscal 2031 and 12% for fiscal 2032. Hence, fiscal 2032 revenues are estimated to be close to $101.2 billion.

Sandisk is currently trading at roughly 4.9 times Wall Street's fiscal 2027 revenue estimate. If the company can eventually convert around half of its revenue into adjusted free cash flow as management expects, a 4.9 times sales multiple would imply a price-to-free cash flow multiple of less than 10. Hence, the assumed valuation seems reasonable if Sandisk can maintain strong growth and margins in the next five years.

If the stock continues to trade at the same forward price-to-sales multiple in fiscal 2031, Sandisk's market value would be about $495.9 billion. Assuming the outstanding share count remains nearly 146.4 million, that would put the stock at roughly $3,387 per share. This implies an upside of around 108%, with a five-year annualized return of roughly 15.8% from its current share price (as of Aug 18, 2026). The estimate, however, assumes Sandisk's share count remains unchanged, even though the company still has $15.5 billion available for share repurchases.

Based on these assumptions, Sandisk stock could reach about $3,387 in five years. However, NAND prices and margins remain the key risks. If NAND prices fall sharply and profitability weakens, investors may be unwilling to pay the same valuation for the stock.

Manali Pradhan, CFA 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.

Space Exploration Technologies (NASDAQ: SPCX) completed the largest U.S. initial public offering on record in June 2026. Shares of Micron Technology (NASDAQ: MU) have gained nearly 240%, while Sandisk (NASDAQ: SNDK) shares have soared over 591% so far in 2026.

But Broadcom (NASDAQ: AVGO) may be the better stock for long-term investors. Here's why.

Image source: Getty Images.

Broadcom's AI business is already producing a lot of cash

Broadcom's revenue rose 48% year over year to $22.2 billion in the second quarter of fiscal 2026 (ending May. 3, 2026). Artificial intelligence (AI) semiconductor revenue jumped 143% year over year to $10.8 billion. Management expects AI semiconductor revenue to reach $16 billion in the third quarter.

As companies build larger computing clusters, Broadcom benefits in two ways. The company helps develop custom accelerators and sells the networking products that connect those chips.

Broadcom generated $10.3 billion in free cash flow but logged just $231 million in capital expenditures in the second quarter. The company can keep its own capital spending relatively low in part because it outsources much of its chip production. In the first two quarters of fiscal 2026, about 95% of the wafers produced by its contract manufacturers came from Taiwan Semiconductor Manufacturing.

The other three stocks come with bigger questions

SpaceX's revenue rose 92% year over year to reach $7.8 billion. But its capital expenditures were $18.4 billion, including $15.8 billion on its AI business. Those investments could pay off, but execution risk is also high.

Micron and Sandisk are benefiting from exceptionally strong memory-market conditions. Micron's revenue reached $41.5 billion, while non-GAAP gross margin hit 84.9% in the third quarter of fiscal 2026 (ending May. 28, 2026).

Sandisk's gross margin was similarly high at 84.6% in the fourth quarter of fiscal 2026 (ended July 3, 2026). Revenue rose 51% sequentially to nearly $9 billion, and two-thirds of that growth was associated with higher prices rather than increased volumes.

However, both companies still face the risk that today's unusually high profits could fall once memory supply catches up with demand. Both are trying to make their results more predictable.

Micron has signed 16 multiyear customer agreements, typically running from calendar year 2026 through calendar year 2030. These deals commit customers to specific purchase volumes, with fixed prices, agreed-upon price ranges, or market-based terms, depending on the contract. Sandisk has also signed new multiyear agreements with eight customers, covering about half of its planned fiscal 2027 memory bits and roughly two-thirds of fiscal 2028 bits.

Broadcom's risk-reward proposition is still attractive

Broadcom is trading at roughly 20 times its average fiscal 2027 earnings estimate of $19.53 (as of Aug. 14, 2026). The valuation looks reasonable, considering analysts expect the company's fiscal 2027 earnings per share to grow year over year by 68%.

Broadcom's five largest customers already account for about 45% of net revenue in the second quarter. The company is also taking on some financing risk. The company has agreed to support financing for AI computing racks leased to one customer over five years. If that customer stops making lease payments, Broadcom could face up to $29 billion of exposure.

Of the four stocks, Broadcom still looks like the better choice for long-term investors. The company combines rapid AI growth, strong cash generation, and a valuation that could support solid returns even as growth slows.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom, Micron Technology, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Memory chip booms rarely last. High memory prices encourage manufacturers to add capacity, which eventually creates too much supply and pushes prices lower.

But today's artificial intelligence (AI)-driven demand for memory could prolong this cycle. Memory manufacturers are struggling to increase production fast enough to keep up with demand.

Image source: Getty Images.

Growing HBM demand

High bandwidth memory (HBM) is essential for AI accelerators, but its production also affects the supply of conventional DRAM. TrendForce estimates HBM could use about 30% of the DRAM production capacity of the three largest memory makers in 2027, while accounting for only 13% of the memory bits they produce. Hence, there is less manufacturing capacity left for conventional memory, just as AI servers are also requiring more server DRAM.

TrendForce expects new factories and more advanced manufacturing processes to increase DRAM bit supply by about 24% in 2027. But this new supply may not be enough to meet demand, as HBM takes up more production capacity and new equipment takes time to arrive.

Memory boom extends beyond Micron

The financial results across the industry's three dominant memory producers show just how powerful the ongoing memory cycle is.

Micron Technology's (NASDAQ: MU) revenue jumped around 346% year over year to $41.5 billion, while its non-GAAP gross margin reached 84.9% in the third quarter of fiscal 2026 (ending May 28, 2026).

SK Hynix's (NASDAQ: SKHY) revenue also soared 257% year over year while operating profit was up 557% year over year in the second quarter of fiscal 2026 (ending June 30, 2026). Samsung (OTC: SSNLF) remained the world's largest server DRAM supplier in the first quarter of 2026, with a 38.5% market share, followed by SK Hynix at 28.8% and Micron at 22.4%.

There is another sign of how tight the memory market has become. TrendForce found that conventional server DRAM has been more profitable to produce than HBM since the first quarter of 2026. This is partly because DRAM prices have risen much faster, while HBM prices were locked into longer-term contracts. Hence, the AI boom is no longer benefiting only HBM. The resulting tight capacity is also supporting prices and profits across the broader DRAM market.

Increasing memory capacity

Not surprisingly, Samsung, SK Hynix, and Micron are all expanding their manufacturing capacity. SK Hynix recently approved $38.3 billion of investment in new chip manufacturing facilities in South Korea, including capacity for HBM and other advanced DRAM products. Micron is also expanding its DRAM manufacturing capacity in the U.S.

According to Reuters, China-based ChangXin Memory Technologies is the world's fourth-largest DRAM maker. The company also reportedly plans to more than double its production capacity from about 300,000 wafers per month to over 600,000.

But it takes time for the new supply to come online. According to TrendForce, long equipment lead times and the shift of capacity toward HBM are keeping DRAM supply growth behind demand. This delay could prolong the memory boom, even as manufacturers expand production.

But that does not mean the boom will last forever. TrendForce expects NAND supply to loosen in the second half of 2027, while DRAM capacity could remain tight in 2027.

Hence, for investors, the key signal will be when DRAM supply growth finally outpaces demand. Until then, the current memory boom could have more room to run.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX) has taken investors on a rough ride since its initial public offering (IPO) in June. After reaching an all-time intraday high of $225.64 on June 16, the stock later fell below its $135 IPO price, sinking at one point to a low of $104.83. The stock has this month recovered back to around the IPO price, but it still sits well below $150, the price at which it opened its first day of public trading.

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 »

That said, the company's financial performance is improving. In the second quarter, SpaceX's revenue surged 92% year over year to $7.8 billion, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 191% to $3.5 billion.

Analysts have also been sharply raising their expectations for the company's future revenue and now expect SpaceX to generate roughly $102 billion in revenue in 2027, up from about $72 billion at the end of July 2026.

Here's why SpaceX stock can reach roughly $220 by June 2027, representing about 50.5% upside from its Aug. 12 closing price.

Starlink is the profit engine, but AI is growing faster

The connectivity segment, which includes the Starlink satellite internet business, remains SpaceX's profit engine. That segment generated $4.3 billion in revenue and $1.7 billion in operating income in the second quarter. Starlink's subscribers doubled year over year to 12 million.

SpaceX's artificial intelligence (AI) business is growing even faster, with revenue rising almost 247% year over year to $2.6 billion in the quarter. While AI accounted for nearly one-third of SpaceX's total sales, the segment reported a $1.3 billion operating loss. SpaceX also spent $15.8 billion on AI capital expenditures in the second quarter.

The company's massive investments in infrastructure could pay off if analyst forecasts prove accurate. Analysts at Goldman Sachs and Morgan Stanley have projected that SpaceX could generate around $160 billion in revenue and $110 billion in adjusted EBITDA in 2028.

How SpaceX stock could reach $220

By June 2027, SpaceX's share price will most likely reflect investors' expectations for the company's 2028 growth.

Following its IPO, SpaceX had roughly 13.2 billion shares outstanding. The company's pending $60 billion all-stock acquisition of Cursor AI's parent company Anysphere could add close to 410 million shares based on the Aug. 12 closing share price. However, the actual share issuance will depend on where they are priced at the time the transaction is finalized.

SpaceX also has hundreds of millions of shares underlying outstanding employee stock options and restricted stock units, which will create additional dilution over time. In light of that, assuming that it will have 13.7 billion shares outstanding at the end of June 2027 provides a reasonable adjustment to anticipate additional dilution.

SpaceX was trading at about 18.9 times expected 2027 sales as of Aug. 12. If the company generates the roughly $160 billion in 2028 revenue projected by Goldman Sachs and Morgan Stanley and continues trading at that multiple, its market value would reach about $3 trillion. Dividing the market capitalization by the assumed 13.7 billion shares implies a stock price of roughly $220.

However, the biggest risk is SpaceX's enormous capital spending. The company's capital expenditures reached $18.4 billion in the second quarter, more than twice its revenue in the period. If investments in AI infrastructure and the next-generation reusable rocket system Starship fail to generate strong returns, investors could become less willing to give SpaceX stock the premium valuation it currently carries.

But if SpaceX delivers results near Wall Street's 2028 forecasts while maintaining a valuation close to current levels, the stock could generate significant returns for shareholders by the end of June 2027.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ: NVDA) continues to be a dominant force in the artificial intelligence (AI) boom, thanks largely to its industry-leading graphics processing units (GPUs). But another type of technology is becoming increasingly important to the company's growth.

Nvidia generated a record $14.8 billion in data center networking revenue in its fiscal 2027 first quarter (which ended April 26), up 199% year over year. Networking revenue rose from $8.6 billion in its fiscal 2024 to $13 billion in its fiscal 2025 and to $31.4 billion in its fiscal 2026. Its opportunity in the space could become even larger as AI clusters scale further and require increasingly powerful networking infrastructure to connect many thousands of accelerator chips together.

Image source: Getty Images.

Networking is becoming a major growth engine

Modern AI systems increasingly depend on high-performance networking as well as raw computing power. Training and running increasingly sophisticated models requires massive amounts of data to be moved rapidly among large numbers of accelerators and data storage devices. If the network cannot keep up, communication can become a bottleneck that reduces GPU utilization and slows AI workloads.

Nvidia's NVLink technology connects GPUs inside powerful AI rack systems, while Spectrum-X Ethernet connects servers and racks across larger data centers. As AI systems scale, the company has more opportunities to sell networking and interconnect technology alongside its computing hardware.

According to research firm IDC, Nvidia captured 21.5% of data center Ethernet switching revenue in the first quarter of 2026, making it the market leader.

Custom AI chips are strengthening the networking opportunity

Custom AI chips are a growing competitive threat to Nvidia's GPUs. But the NVLink Fusion rack-scale platform could cushion the company against that threat by allowing some custom processors to work alongside its networking and infrastructure technologies. That gives it another way to benefit from the rising AI infrastructure spending, even in cases when it doesn't supply the AI accelerators.

Nvidia has also expanded its partnership with custom chip designer Marvell Technology (NASDAQ: MRVL). Under the partnership, Marvell will provide custom accelerators and the networking hardware needed to connect those processors at high speeds, while Nvidia will supply technologies including NVLink high-speed interconnect technology, Spectrum-X switches, ConnectX network adapters, and BlueField data processing units.

Nvidia's networking business will not benefit from every custom AI chip. Customers can still choose competing networking technologies, and its networking gains may not fully compensate for the loss of lucrative GPU sales to rival chipmakers.

Competition is also significant, with market research firm IDC estimating Arista Networks' share of the data center Ethernet switching market at 20.7%, marginally below Nvidia's 21.5% share.

Still, Nvidia is trying to sell more of the technology that goes into each AI data center, rather than relying so heavily on its GPUs.

Networking could help support a $7.5 trillion market capitalization for Nvidia

Nvidia is trading now at around 24.1 times Wall Street's fiscal 2027 earnings estimate of about $9 per share (as of Aug. 12). Analysts currently expect its earnings to increase to approximately $12.90 per share in fiscal 2028.

If Nvidia delivers on those expectations and continues to trade at roughly the same forward valuation, its market capitalization could approach $7.5 trillion, compared to roughly $5.3 trillion today. However, valuation compression would limit its upside even if earnings rise.

Still, networking is no longer a peripheral business for Nvidia. As AI factories become larger and more communication-intensive, Nvidia's ability to sell more of the infrastructure surrounding its chips could become an increasingly important part of its next phase of growth.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Arista Networks, Marvell Technology, and Nvidia. The Motley Fool has a disclosure policy.

NuScale Power (NYSE: SMR) is still in the early stages of commercialization. The company's revenue fell 99% year over year to just $75,000 in the second quarter of fiscal 2026 (ending June 30, 2026), while its operating loss widened 49% to $64 million.

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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 »

However, the mismatch between today's business and what NuScale Power could eventually become is exactly what makes the stock interesting.

Why NuScale Power could scale

NuScale Power uses familiar water-cooled reactor technology and conventional nuclear fuel, but in a smaller, simpler design. The company's small reactor modules can be factory-built and added over time, allowing customers to start smaller and expand later instead of committing immediately to one massive nuclear project.

NuScale Power has already secured approval from the Nuclear Regulatory Commission for its reactor module, which can generate 77 megawatts (MW) of electricity. The company expects to earn revenue from technology licenses, reactor equipment, engineering, and services that can begin about five years before a plant starts operating and continue throughout its life. Customers are also expected to pay for module manufacturing as it begins, which could reduce the amount of working capital NuScale Power needs to provide.

NuScale Power needs repeat orders

The Department of Energy estimates that repeat advanced nuclear projects could cut capital costs by about 40%, while five to 10 projects using the same design could help support commercial-scale production.

NuScale Power's planned Doicesti project in Romania could become its first major commercial project. The company has completed a major engineering phase on schedule and under budget, although key financing and commercial terms remain unresolved. Hence, the next challenge is proving that customers can finance their reactors at competitive prices.

At about $9.77 per share (as of Aug. 7, 2026), NuScale Power had a market capitalization of $4.2 billion. The stock trades at about 28.6 times forward one-year sales, indicating that investors are already paying a premium for future growth.

NuScale Power ended Q2 with roughly $1.9 billion of liquidity after raising about $984 million through common stock issuance during the first half of 2026. A fivefold return would require a market value of about $21 billion. Analysts expect the company's revenue to reach around $2.1 billion by 2031, which would still value it at about 10 times sales at that market capitalization.

Hence, NuScale Power would need continued growth beyond 2031, while keeping further shareholder dilution under control.

Significant risks, but also real opportunity

NuScale Power's Utah Associated Municipal Power Systems (UAMPS) project was canceled in 2023 after it failed to attract enough customer commitments. The project's target electricity cost had increased from $58 per megawatt-hour to $89. Additionally, customers had committed to only 120 MW of capacity, compared with roughly 370 MW required.

The next major milestone is a firm order for NuScale Power's reactor modules. Romania has already signed licensing and engineering agreements with the company, but it has not yet placed a binding order for the modules themselves. ENTRA1 and the Tennessee Valley Authority (TVA) are also discussing a much larger program that could eventually use up to 6 gigawatts of NuScale capacity. But the agreement remains nonbinding.

If NuScale Power can turn projects into repeat reactor orders, its business could shift from small, uneven engineering and licensing revenue to much larger reactor sales and long-term services.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.

Mark Cuban recently raised concerns about how the artificial intelligence (AI) boom is being financed. In a July 28 post on X, he described Nvidia (NASDAQ: NVDA) as the sector's IPO, "funding everyone and anyone."

Cuban was not suggesting that Nvidia literally takes companies public. He was comparing Nvidia's role with the dot-com boom, when IPOs gave young internet companies money to expand. Nvidia is now investing in AI model developers and cloud operators, as well as other companies supporting the wider AI market.

Image source: Getty Images.

Nvidia's financing role is becoming significant

Nvidia exited the first quarter of fiscal 2027 (ending April 26, 2026) with $42.3 billion of private investments and another $27 billion of contingent investment commitments. Nvidia's wider investment portfolio includes model developers OpenAI and Anthropic, cloud operators CoreWeave (NASDAQ: CRWV) and Nebius Group (NASDAQ: NBIS), and technology suppliers such as Intel, Synopsys, Nokia, and Coherent.

Some of these investment deals could benefit Nvidia twice. Nvidia's investment may rise in value, while the company receiving the money may buy more Nvidia technology. But that link is not automatic. Several investments are also supporting suppliers and technology partners, not just customers. Therefore, its investment portfolio alone does not show that Nvidia is creating its own sales.

Impact on AI stocks

Cuban's warning is not a blanket argument against AI stocks. Large cloud providers and profitable AI chip and networking players can fund much of their spending from existing operations. A slowdown in data center construction could reduce their free cash flow, orders, or valuations, but it would not immediately threaten their ability to operate.

The warning matters most for companies that need regular outside funding to keep expanding. Specialized cloud operators face greater risk.

CoreWeave generated nearly $2.1 billion in revenue but spent $6.8 billion on capital expenditures in the first quarter of 2026 (ending March 31, 2026). Nebius shows a similar gap, with $399 million in revenue and nearly $2.5 billion in capital expenditures in the first quarter.

Demand is not necessarily the problem. CoreWeave exited the first quarter with a $99.4 billion revenue backlog, while Nebius had nearly $4.8 billion of deferred revenue. The challenge is funding the GPUs and data centers needed to deliver that future revenue before much of the cash comes in.

Iren (NASDAQ: IREN) is also a close Nvidia partner, but Nvidia has not yet made the full agreed-upon $2.1 billion investment. Instead, Nvidia has the right to purchase up to 30 million Iren shares at $70 each, subject to certain conditions.

Iren faces a similar timing issue at an earlier stage. The company generated $144.8 million of revenue in the third quarter of fiscal 2026 (ending March 31, 2026). But the company spent about $1.36 billion on computer hardware, property, and equipment.

Hence, Nvidia's stake in these companies is only part of the story. The bigger issue is whether they can eventually fund expansion with cash from their own businesses. Companies that still depend on external financing could face slower growth if funding becomes harder to obtain.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Coherent, Intel, Nvidia, and Synopsys. The Motley Fool has a disclosure policy.

Shares of Micron Technology (NASDAQ: MU) are up 207% so far in 2026 (as of Friday market close).

While the rally has been impressive, investors may now be wondering whether the company's rapid business improvement is beginning to slow.

Image source: Getty Images.

Micron's rally has been extraordinary

Micron sells DRAM, which helps processors handle data, and NAND, which stores it. The company also makes high-bandwidth memory (HBM), an advanced type of DRAM used in artificial intelligence (AI) systems.

AI data center spending has increased demand for HBM and conventional server memory, while supply remains tight. Micron is shipping HBM4 in high volumes for its lead customer. Since HBM uses much more wafer capacity than conventional DRAM, rising HBM production also limits the supply of ordinary memory chips.

These favorable conditions helped Micron report revenue of $41.5 billion and adjusted earnings per share (EPS) of $25.10 in the third quarter of fiscal 2026 (ending May 28, 2026). Management expects revenue to be in the range of $49 billion to $51 billion and adjusted EPS in the range of $30 to $32 in the fourth quarter.

Expectations may now be running ahead of the cycle

Memory earnings are cyclical. High prices encourage producers to add capacity, which can eventually weaken selling prices and margins.

While DRAM and NAND prices are still rising, the pace of increase is expected to slow sharply. Micron's average DRAM selling prices rose in the low-60% range sequentially in the third quarter, while NAND prices increased in the mid-80% range. However, TrendForce, a Taiwan-based industry intelligence and consulting firm, expects contract prices in the third calendar quarter to rise only 13% to 18% for conventional DRAM and 10% to 15% for NAND.

PC manufacturers are rebuilding DRAM inventories, while cloud providers are increasing server-memory purchases ahead of expected supply shortages in 2027. This supports Micron's near-term demand, although some of this early buying could reduce purchases in later quarters.

Parts of the NAND market are showing early signs of cooling. TrendForce found that NAND wafer prices stopped rising in July as high costs and weak consumer demand made buyers cautious, resulting in very limited trading activity.

Micron is currently trading at just 5.5 times one-year forward earnings, which appears cheap. However, a low forward price-to-earnings multiple can be misleading for a cyclical company when the estimate is based on unusually high earnings.

Triggers for pullback

Slower increases in DRAM and NAND prices could cause Micron's profit margins to peak and analysts' earnings forecasts to stop rising. Wall Street's fiscal 2027 EPS estimate for Micron has jumped from $95.80 three months ago to $154.70. However, it has increased by only 1.2% over the latest month. If slower memory price growth causes earnings upgrades to stall or reverse, Micron's low forward earnings multiple may prove misleading.

Micron is increasing capital spending, with fiscal 2026 expenditures expected to reach roughly $27 billion. However, several major capacity projects will not begin contributing until mid-2027 or later. Hence, slowing earnings growth is a more immediate risk to the stock than a sudden increase in memory supply.

The bearish thesis could fail if HBM demand continues to exceed supply, the company executes its HBM4 ramp-up successfully, and gross margin remains elevated. Delays in new capacity could also extend the current memory cycle and keep earnings stronger for longer.

But I would wait rather than chase Micron after its extraordinary rally.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.

Nebius Group (NASDAQ: NBIS) stock has surged about 298% over the past year. The rally was supported by rapid revenue growth, major agreements with technology giants such as Meta Platforms and Microsoft, and a $2 billion investment from Nvidia.

The share price gain appears impressive, considering that the stock has already fallen about 26% from its record closing price in June. However, the pullback also suggests that investors are no longer rewarding the company for announcements alone.

Nebius must demonstrate that its contracts, data centers, and heavy spending can generate sufficient revenue to support its valuation.

Image source: Getty Images.

Strong demand still requires execution

Nebius provides cloud computing infrastructure and software that companies use to train and run artificial intelligence (AI) models. In the first quarter, the company's revenue surged 684% year over year to $399 million, while its core AI-cloud revenue jumped 841% to $390 million. Management expects revenue in the range of $3 billion to $3.4 billion in 2026.

The long-term agreements with Meta Platforms and Microsoft give Nebius strong visibility into future demand. However, the company must still build and equip the required data centers on schedule before it can recognize revenue from those contracts.

What history tells us

Nebius shares jumped nearly 15% on March 16 after the company announced its new long-term AI infrastructure agreement with Meta Platforms. However, the next day, Nebius announced plans to raise $3.75 billion through convertible notes. The final principal amount later reached around $4.34 billion. By March 31, the stock had fallen around 20% from its March 16 closing price.

The company's share price later reached a record closing price of $286.69 on June 18 and closed at $212.58 on Aug. 3. This does not prove that Nebius' stock has peaked. It shows that large contracts can quickly lift investor expectations. But the financing and construction required to fulfill those contracts can put downward pressure on the shares.

The valuation leaves little room for delays

Nebius shares are currently trading at nearly 17 times the midpoint of management's 2026 revenue guidance of $3.2 billion. Hence, the company is already trading at a premium valuation.

To reach the $3.2 billion midpoint of its full-year guidance, Nebius must generate about $2.8 billion over the remaining three quarters, which implies an average of roughly $934 million in revenue per quarter, more than double its first-quarter revenue. An evenly paced growth path would require revenue to rise about 49% sequentially each quarter, reaching approximately $1.3 billion in the fourth quarter.

While this target is possible, it is also demanding. Nebius' AI cloud revenue already grew 82% sequentially in the first quarter. Management also expects a significant increase in capacity during the third quarter. However, delays in bringing that capacity online could postpone revenue recognition.

Nebius remains a watch list stock for now. However, the company's upcoming earnings results need to show that revenue and data center capacity are rising fast enough to support the valuation. Investors should also watch whether the AI infrastructure expansion requires significantly more borrowing or new share issuance, which could dilute existing shareholders.

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

OpenAI CEO Sam Altman says artificial intelligence has entered the "singularity," a stage where AI progress could accelerate rapidly.

While that description can prove premature, increasingly capable models could still boost demand for Nvidia's (NASDAQ: NVDA) AI-optimized hardware and software offerings and Microsoft's (NASDAQ: MSFT) cloud and software products.

Image source: Getty Images.

What Sam Altman means by the "singularity"

On the Relentless podcast, Sam Altman said, "We're now, like, in the singularity." In its traditional sense, the singularity is the point in time when AI begins creating increasingly intelligent systems so quickly that progress becomes difficult for humans to predict or control.

Altman appears to be using "singularity" more broadly. Current AI can write code, find security flaws, and help researchers improve models. But there is no public evidence that it can independently design, train, and deploy increasingly capable successor systems.

OpenAI still treats AI self-improvement as an advanced capability that models must be tested for, rather than something they can already do reliably. Anthropic treats fully automated AI research and rapid acceleration in AI development as risks to monitor rather than established milestones.

Nvidia could win before the singularity arrives

More capable AI models can increase the computing needed both to build them and to run them. This, in turn, drives demand for advanced processing and networking chips and high bandwidth memory.

Nvidia is already benefiting from this trend. In the first quarter of fiscal 2027 (ending April 26, 2026), data center revenue rose 92% year over year to $75.2 billion. The company claimed that its new Dynamo software can help Blackwell chips process AI requests up to 7 times faster. The company's next-generation Vera Rubin systems are also moving into full production to run AI agents that handle longer and more complex tasks.

While increasing efficiency can limit Nvidia's growth by requiring fewer chips, lower costs could encourage much wider use of AI agents and reasoning models. Hence, Nvidia will benefit only if overall AI usage grows faster than the pace at which computing becomes more efficient. Custom chips from Microsoft, Alphabet, and Amazon add another competitive risk.

Microsoft can also turn stronger AI into revenue

Microsoft can monetize stronger AI through Azure cloud infrastructure, its stake in OpenAI, and Microsoft 365 Copilot.

The AI business is already gaining traction. In the fourth quarter of fiscal 2026 (ending June 30, 2026), Azure and other cloud services revenue rose 43% year over year. Microsoft 365 Copilot also surpassed 30 million paid users.

Microsoft does not own OpenAI, but is a primary cloud partner and a major shareholder. Microsoft will also receive a share of OpenAI's revenue through 2030 and can use its models and products under a nonexclusive license through 2032.

Microsoft, however, must balance the cost of supporting its AI growth. The company spent $35.8 billion on property, plant, and equipment expenses in the fourth quarter, more than double the amount in the same quarter of the prior year. Hence, the company needs to generate enough revenue to cover these rising infrastructure costs and deliver attractive returns.

Which stock benefits more?

Nvidia and Microsoft are trading at 15.6 times and 20.3 times their forward earnings, respectively.

Nvidia looks more attractive today, provided overall AI usage continues to grow faster than improvements in computing efficiency and competition from custom chips.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

Nebius Group (NASDAQ: NBIS) and CoreWeave (NASDAQ: CRWV) both provide specialized cloud infrastructure for training and running artificial intelligence (AI) models. CoreWeave scaled rapidly through leased infrastructure, large customer commitments, and extensive debt financing. Nebius is smaller, but it designs and develops its own cloud software, storage, networking, and workload-management tools.

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The better stock depends on whether CoreWeave's scale and backlog outweigh its financing burden, or whether Nebius can turn its stronger financial position into better shareholder returns.

Revenue visibility

CoreWeave generated revenue close to $2.1 billion in the first quarter (ending March 31, 2026), up 112% year over year. The company also had more than 1 gigawatt of power capacity operating across its data centers.

CoreWeave ended the first quarter with $99.4 billion of revenue backlog. These figures show that it already operates at substantial scale and has strong visibility into future revenue. However, much of that backlog will not become revenue until the company delivers the promised computing capacity and makes the service available to customers.

Nebius is a smaller company, but its first-quarter revenue soared 684% year over year to $399 million. The company has also secured access to more than 4 gigawatts of power for its data center expansion. However, much of that future capacity still needs to be built and brought into operation.

Nebius' commercial pipeline generation was about 3.5 times the previous quarter's level. The company has also signed multiple large customer contracts. For instance, Microsoft has agreed to pay up to $17.4 billion through 2031, subject to Nebius installing the promised graphics processing unit (GPU) systems and keeping that computing capacity available. Microsoft can also purchase another $2 billion in services or capacity, potentially increasing the contract's total value to roughly $19.4 billion.

Meta Platforms has agreed to purchase $12 billion of dedicated capacity over the next five years. The company is also required to purchase up to $15 billion of additional capacity if Nebius cannot sell specified capacity to other customers. These agreements reduce the risk that Nebius will build expensive data centers without enough customers to use them.

Heavy financing burden

CoreWeave's 56% adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin looks impressive, but its adjusted operating margin was only 1% after accounting for depreciation and amortization. Its debt-funded expansion also resulted in $536 million of net interest expense, contributing to a $740 million net loss. CoreWeave ended the first quarter of 2026 with $25.1 billion in debt and $10.1 billion in operating lease liabilities. As a result, depreciation, interest payments, and long-term lease obligations currently leave much less of CoreWeave's revenue available to benefit shareholders.

Nebius has invested about $2.47 billion in property, equipment, and intangible assets during the first quarter. Although operating cash flow reached $2.3 billion, that figure includes a $3.2 billion increase in deferred revenue. This largely reflects customer payments received before Nebius delivers future services. While those prepayments can help fund expansion, they are not recurring free cash flow.

CoreWeave is the better operating business today. But Nebius' lighter financial burden and focus on owned data centers could enable it to deliver better long-term returns for shareholders. Hence, Nebius appears to be a better stock, although investors should monitor whether it can bring new capacity online without excessive debt or dilution.

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

Bitcoin (CRYPTO: BTC) mining revenue can rise or fall with Bitcoin prices, competition from other miners, and electricity costs. TeraWulf (NASDAQ: WULF) is trying to reduce revenue volatility by leasing data center infrastructure to artificial intelligence (AI) customers.

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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 »

TeraWulf recently signed a 20-year agreement to provide Anthropic with roughly 401 megawatts of AI computing capacity. The lease is expected to generate approximately $19 billion of contracted revenue, with the first facilities scheduled to begin operating in late 2027.

However, with TeraWulf stock up nearly 242% in the past year (as of July 31), investors must determine how much of that opportunity is already reflected in the share price.

Why Bitcoin miners are turning to AI

Bitcoin-mining machines cannot be converted into AI servers. The real opportunity lies in the power infrastructure some miners already control, including land, grid interconnections, substations, electrical systems, and cooling equipment.

Bitcoin miners that already control land, grid connections, and substations may be able to deliver AI capacity faster than developers starting from scratch. But only a few can make the shift, because AI data centers need highly reliable power, advanced cooling, fast networking, and substantial financing.

TeraWulf is already making progress. The company's 60 megawatts of operating AI and high-performance computing (HPC) capacity generated $21 million of lease revenue in the first quarter, compared with $13 million from Bitcoin mining. HPC leasing accounted for about 62% of total revenue.

TeraWulf's opportunity can increase expenses

The Anthropic lease is expected to generate about $19 billion over its initial 20-year term, averaging $950 million annually. However, this is not current revenue or profit. Anthropic will begin paying rent only as TeraWulf delivers each phase. Additionally, construction, operating, and financing costs will reduce the amount ultimately available to shareholders.

TeraWulf must spend heavily on construction before it can collect rent from Anthropic. The company has not yet disclosed the project's total cost or full financing plan. TeraWulf exited the first quarter with $5.3 billion in debt.

It has already used stock sales to help fund its expansion. An April common stock offering and other share issuances increased its share count from 425.1 million on March 31 to 495.5 million on May 5. Hence, while further stock sales could fund construction, they could also dilute existing shareholders.

Is WULF still worth buying?

TeraWulf's market capitalization was around $8.75 billion as of July 31. Hence, investors are already valuing the company at almost 9.2 times the Anthropic lease's simple average annual revenue, even before including the remaining construction capital.

While the valuation and execution risks cannot be ignored, TeraWulf's strengths include a 20-year contract with Anthropic, direct ownership of the infrastructure, and an AI-hosting business that is already generating revenue.

TeraWulf appears to be a higher-risk, higher-reward stock that is best kept as a small position. The key question is how the company will fund the Anthropic campus. Affordable project financing would support the investment case, while another large stock sale could dilute existing shareholders.

Manali Pradhan, CFA 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.

Nvidia (NASDAQ: NVDA) closed at $197.01 on July 28, so a $1,000 investment would purchase approximately 5.08 fractional shares.

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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 »

In this article, "history repeats itself" does not mean Nvidia must reproduce an earlier stock return or return to one of its highest valuation multiples. Instead, it refers to Wall Street once again raising its earnings estimates and a modest valuation expansion as a major product cycle develops.

Nvidia has repeatedly surpassed Wall Street's forecasts

After Nvidia reported its fiscal fourth-quarter results in February 2024, Wall Street's estimate for the company's earnings over the next 12 months rose from $22.52 per share to $27.19 by May 2024, an increase of nearly 21%.

Nvidia's share price performance during the Blackwell product cycle provides a more relevant guide to its current situation. Introduced in March 2024, Blackwell combines artificial intelligence (AI) chips, CPUs, networking, and complete computing systems. Major cloud providers had already announced plans to adopt the platform, so Blackwell was launched with far higher expectations than Hopper. The setup is similar in 2026, as Wall Street already expects strong growth while Nvidia ramps production of its next-generation Vera Rubin platform ahead of broader deployments later in 2026.

However, analysts could still underestimate how much revenue Rubin generates from each deployment. The platform brings together GPUs, CPUs, networking, switches, storage systems, and software. Nvidia can therefore capture more revenue from a complete AI system, even without a major jump in GPU volumes.

What a $1,000 investment could become

Wall Street currently expects Nvidia to earn $8.99 per share in fiscal 2027 and $12.87 in fiscal 2028. At $197.01, the stock trades at roughly 22 times the fiscal 2027 earnings estimate.

The following calculation estimates Nvidia's share price one year from July 2026. Assume fiscal 2028 earnings-per-share (EPS) to exceed the current consensus estimate by 3.7%, matching the company's average EPS surprise over the previous eight quarterly reports. Hence, Nvidia's fiscal 2028 EPS could rise from $12.87 to about $13.35 per share.

Assuming Nvidia trades at 20 times its fiscal 2028 earnings estimate in July 2027, the projected EPS of $13.35 implies a share price of approximately $267. The 20 times multiple is below Nvidia's current valuation of about 21.9 times fiscal 2027 earnings and well below the levels seen during much of the Blackwell cycle. It reflects slower expected growth and the possibility that current forecasts already include much of Rubin's potential. So at approximately $267 per share, the original $1,000 investment would then be worth about $1,351, representing a return of roughly 35%.

But reaching that share price will depend on a fast Rubin rollout, continued hyperscaler spending, and higher Nvidia revenue per AI system. The main risks are weak customer returns on AI spending, increasing competition, and export controls.

Nvidia still seems to be a good long-term pick, but the uncertainty surrounding Rubin and AI spending favors gradual buying rather than an aggressive purchase at today's price.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, priced shares for $135 in its June 2026 initial public offering (IPO). The stock has since fallen nearly 16% to $113.5 as of July 27.

A $1,000 investment at the IPO price would have purchased about 7.41 shares and would now be worth roughly $841 as of this writing. However, that calculation assumes the investor received shares at the IPO price, which was not guaranteed for every retail investor. Strong investor demand and a limited supply of publicly traded shares helped drive SpaceX stock higher after its IPO. Investors reportedly submitted more than $250 billion in orders for the SpaceX IPO, while less than 5% of the company's shares were initially available for trading. The stock later lost much of its early gain as investors questioned its lofty valuation.

Image source: Getty Images

Against this backdrop, SpaceX's long-term share price trajectory depends heavily on whether the Starlink satellite internet business can continue to grow profitably and the next-generation Starship reusable rocket system can become a reliable commercial business.

Starlink remains the profit engine

SpaceX's connectivity segment, powered mainly by Starlink, generated $3.26 billion in revenue and $1.19 billion in operating profit in the first quarter. However, the operating profit can be misleading because SpaceX does not expense the full cost of launching Starlink satellites immediately. Instead, it capitalizes those internal satellite and launch costs in the Connectivity segment and recognizes them gradually through depreciation. In the first quarter, depreciation from capitalized satellite and launch costs added $276 million to Connectivity's cost of revenue.

Anthropic has also agreed to pay SpaceX $1.25 billion per month for computing capacity through May 2029, although fees are lower during the May and June 2026 ramp-up period.

While that contract could eventually make AI a larger source of revenue, the AI segment is still loss-making. SpaceX's AI segment posted a $2.47 billion operating loss in the first quarter, showing that rapidly rising compute revenue may not immediately translate into profits. Hence, for now, Connectivity segment remains the company's main source of operating profit.

What comes next

SpaceX will report second-quarter results on Aug. 4. Around 911.5 million shares held by employees and early investors could become eligible for sale soon after this earnings report. While not all the eligible shareholders may sell the stock immediately, even a partial release could sharply increase the stock's available supply and add to near-term volatility.

SpaceX's planned $60 billion stock-funded Cursor acquisition would dilute existing shareholders if completed. Additionally, the $25 billion bond offering adds interest costs as the company continues investing heavily in artificial intelligence (AI), Starship, and other ambitious projects.

Starship is also expected to become a key growth catalyst. The rocket is designed to carry up to 60 higher-capacity Starlink V3 satellites per launch, potentially deploying 20 times more network capacity than the currently used Falcon 9 rocket. However, SpaceX must still prove that Starship can launch and be reused reliably enough to lower costs and improve Starlink's economics.

SpaceX is trading at roughly 38.5 times the analyst consensus 2026 revenue estimate of $39.3 billion. The premium valuation assumes major success across several businesses that are not yet profitable or fully commercial.

SpaceX could eventually justify a premium if Starlink maintains strong margins, Starship becomes dependable, and AI segment becomes profitable.

Manali Pradhan, CFA 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.

Rocket Lab (NASDAQ: RKLB) is building a business that extends well beyond small rocket launches.

In its recent Victus Haze mission, Rocket Lab combined an Electron rocket, a company-built Pioneer spacecraft, mission software, ground control systems, and in-space operations into a single rapid response service for the U.S. Space Force. The company launched the spacecraft just 16 hours and 42 minutes after receiving the Space Force's final instructions. The company also activated and tested the spacecraft in about 38 hours, well ahead of the 72-hour deadline.

The spacecraft was then moved close enough to a target satellite to track, observe, and photograph it in less than 59 hours. The exercise simulated how the U.S. military could quickly inspect a satellite that was behaving unexpectedly or potentially threatening another spacecraft.

Image source: Getty Images.

Rocket Lab sold an entire mission

Rocket Lab did not invent satellite imaging or the ability to move one spacecraft close to another. The breakthrough was to bring the rocket, satellite, software, and in-space operations together under one company and complete the entire mission within days.

Rocket Lab said Victus Haze marked the first U.S. Space Force rapid-response mission in which a single prime contractor supplied the rocket, spacecraft, and on-orbit operations. Traditional missions can involve separate companies responsible for the spacecraft, launch, software, and orbital operations. Reducing those handoffs could help the Space Force move faster and lower the risk that delays at one contractor disrupt the entire mission. Hence, the company can now earn revenue from several parts of one mission instead of being paid only for the launch.

The original $32 million Victus Haze contract covered the design and manufacture of a Rocket Lab spacecraft, its launch on Electron, and subsequent on-orbit operations. The mission included custom engineering and years of development, so its profit margin may have been modest. However, it still shows how Rocket Lab can increase revenue per customer by selling the spacecraft, launch, software, and mission operations together instead of charging only for the launch.

Growth catalysts and risks

Victus Haze was more demanding than a normal launch because Rocket Lab did not know the final orbit in advance. After receiving the Space Force's launch order, the company took about four hours to finalize the trajectory, update the rocket's software, and coordinate ground station support.

Rocket Lab will continue operating Pioneer for several months under additional Space Force assignments. These tasks will test more advanced ways of tracking, approaching, and observing.

Rocket Lab could generate more revenue from additional spacecraft and continued in-space operations. Repeat missions may also become cheaper to deliver if the company can reuse Pioneer's design, software, and testing work, although Rocket Lab has not quantified those potential savings.

However, the Victus Haze contract is still small compared with the company's $2.2 billion backlog. Hence, this integrated offering will become financially meaningful only if it secures more contracts or enters into a recurring services program with the U.S. Space Force.

Rocket Lab had about $1.48 billion in cash and investments at the end of the first quarter. After raising additional capital and securing more funding, the company said it had access to more than $2 billion in total liquidity. However, its larger financial commitment remains Neutron, the next-generation reusable rocket it is developing to launch heavier satellites.

Victus Haze could help Rocket Lab win a bigger role in future space and defense missions. The next test is whether it leads to repeat orders that generate healthy profits.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rocket Lab. The Motley Fool has a disclosure policy.

Quantinuum (NASDAQ: QNT) priced its June initial public offering at $60 per share. However, the stock closed trading Friday at $52.29, about 13% below that price. After factoring in the shares that existing owners of its common units can receive in exchange for its them, Quantinuum will have roughly 261 million shares of Class A stock outstanding.

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 »

Quantinuum's market capitalization was approximately $13.6 billion as of the close of trading on Friday. However, that is a steep market value for a company that generated only $30.9 million in revenue in 2025 and just $5.24 million in the first quarter of 2026.

Against this backdrop, here is where Quantinuum's stock could be one year from now.

Technical progress must translate into revenue

Quantinuum builds quantum computers using trapped-ion qubits -- each such qubit consists of a single electrically charged atom held in place by electromagnetic fields and manipulated with microwaves and lasers. The company also provides direct and cloud-based access to its quantum computers, software tools, research services, and cybersecurity products.

Quantinuum's Helios system has 98 physical qubits and has demonstrated 48 logical qubits. Logical qubits are composed of groups of physical qubits. The redundancy in those groups makes it easier to detect and correct the errors that physical qubits are prone to, making quantum calculations more reliable. The company expects to launch its next-generation Sol system in 2027. Quantinuum is targeting a size of about 100 logical qubits and 99.999% logical fidelity for the Sol quantum computer. That would mean an error rate of roughly 0.001%, although actual performance may vary depending on the operation and workload.

However, Quantinuum is still in the early stages of turning its technology into a large commercial business. In the first quarter, net revenues fell 73% year over year, mainly because the prior-year quarter included $16.5 million from a hardware lease. The company also exited the first quarter with remaining performance obligations (a measure of contracted backlog) of $76.8 million.

Where the stock could be in one year

Quantinuum was trading at nearly 512 times the analysts' consensus 2026 revenue estimate of $26.5 million. On the other hand, leading pure-play quantum computing player IonQ is trading at approximately 48 times its consensus 2026 revenue estimate of $268.33 million.

Analysts expect Quantinuum's revenue to rise by 67% to approximately $44.3 million in 2027. Using that estimate as the base case and applying a generous price-to-sales multiple of 100 would give the company an estimated market capitalization of roughly $4.44 billion one year from now. The multiple still represents a substantial premium to IonQ's valuation, reflecting Quantinuum's technical progress, broader software portfolio, and its strategic backing from Honeywell Technologies.

Assuming Quantinuum's share count remains near 261 million over the next year, that estimated market capitalization of $4.44 billion a year from now implies a share price of approximately $17, about 67% lower than its closing price on July 24.

Using the analysts' low 2027 revenue estimate of $37.9 million for the bear case and a price-to-sales multiple of 48, in line with IonQ's forward multiple, Quantinuum's market capitalization can reach $1.82 billion. Under that scenario, the share price would slide to as low as $7.

Finally, using the analysts' high 2027 revenue estimate of $46.3 million and an exceptionally strong price-to-sales multiple of 140, Quantinuum's market capitalization a year from now would be $6.48 billion, while its share price still falls to $25.

Based on these estimates, there is a possibility of significant downside for Quantinuum stock even under the most optimistic assumptions.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Honeywell Technologies and IonQ. The Motley Fool has a disclosure policy.

Artificial intelligence chips need to process massive amounts of data quickly -- and to access it in an optimal way, they need that data stored nearby on high bandwidth memory (HBM) chips.

For example, Nvidia's (NASDAQ: NVDA) new Rubin GPU is designed to use as much as 288 gigabytes of HBM4, the fourth generation of high bandwidth memory. That's nearly three times the memory used in Blackwell, its predecessor architecture. And rival Advanced Micro Devices' (NASDAQ: AMD) MI400 series accelerators are designed to use up to 432 gigabytes of HBM4.

Image source: Getty Images.

Because of these growing needs, there are shortages across the entire memory market, and rectifying that will require investment across the semiconductor supply chain. The iShares Semiconductor ETF (NASDAQ: SOXX) gives investors exposure to Micron Technology (NASDAQ: MU), the chip designers driving HBM demand, and the equipment suppliers helping manufacturers expand production.

Why the memory supply remains tight

Increasing memory supply will require the few major players in that niche to build large and complex new chip foundries -- and they are doing so. However, the pace of their expansion is constrained by long construction times, shortages of skilled workers, permitting requirements, and the need for additional energy infrastructure. Micron management says it expects supplies of DRAM and NAND to remain tight beyond 2027.

For now, growth in production of HBM can tighten the broader memory market. Each new HBM generation requires more wafer supply compared to conventional memory, putting additional pressure on the supply available for non-HBM. Expanding output requires memory producers to invest in more advanced manufacturing and packaging equipment.

These trends can benefit the components of the iShares Semiconductor ETF, which has nearly 21.4% of its assets in semiconductor manufacturing equipment makers such as Lam Research, Applied Materials, and KLA. Lam Research supplies etching and deposition tools used in advanced memory production. Applied Materials provides equipment for DRAM manufacturing and HBM packaging. KLA's inspection tools help chipmakers detect defects and improve production yields.

Capturing the broader memory opportunity

The iShares Semiconductor ETF also provides exposure to the companies producing memory and driving its demand. The fund owns 30 stocks and charges a 0.34% expense ratio.

Micron accounted for 8.33% of the ETF's value as of July 21, giving investors direct exposure to the HBM, DRAM, and NAND memory markets. Together, Nvidia and Advanced Micro Devices accounted for another 17% of the portfolio, and they are increasing the amount of memory they embed in their AI accelerators. The ETF's other major holdings, including Broadcom and Taiwan Semiconductor Manufacturing, provide wider exposure to the AI chip ecosystem.

However, iShares Semiconductor ETF is far from a pure-play memory fund. It does not hold stakes in the other two major HBM suppliers, South Korea-based SK Hynix and Samsung Electronics. The ETF's top 10 holdings accounted for about 60.8% of assets as of July 21, making it considerably more concentrated than a broad market ETF.

Is SOXX a buy right now?

The iShares Semiconductor ETF closed at $552.69 on July 21. Investors with access to fractional ETF trading could buy roughly 0.18 shares with $100.

The recent semiconductor sell-off has improved the entry point, as the ETF now trades about 16% below its June 22 peak. However, the ETF remains up sharply for 2026, and traded at more than 66 times earnings as of July 21. That premium valuation increases investors' downside risk if AI spending slows, memory prices weaken, or new memory supply reaches the market faster than expected.

Despite those risks, iShares Semiconductor ETF offers a diversified way to invest across the AI memory supply chain rather than betting on a single memory producer. Investors who can tolerate semiconductor volatility and plan to hold for several years can consider putting $100 (or more) into this ETF.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Applied Materials, Broadcom, KLA, Lam Research, Micron Technology, Nvidia, Taiwan Semiconductor Manufacturing, and iShares Trust - iShares Semiconductor ETF. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX) has already taken investors on a wild ride. Shares of the company are down nearly 46.9% from its post-initial public offering (IPO) high of $225.64 and even below its IPO price of $135 (as of July 20).

Investors can buy roughly 8.34 shares of SpaceX with $1,000. The company currently has approximately 13.2 billion shares outstanding, implying a market capitalization of nearly $1.58 trillion. This implies that the company is currently trading at nearly 40.4 times analysts' estimated 2026 revenue of $39.1 billion.

Hence, SpaceX is still trading at a premium valuation that assumes near-perfect execution.

Image source: Getty Images.

Multiple catalysts

SpaceX's connectivity segment, powered by the Starlink satellite network, generated $11.4 billion in revenue and $4.4 billion in operating profit in 2025. Starlink also exited the first quarter of 2026 with 10.3 million subscribers, up 105% year over year. However, Starlink's average revenue per user fell 23% year over year to $66 in the first quarter, as SpaceX expanded into lower-priced international markets.

Continued subscriber growth, increasing penetration in the enterprise and government segments, and Starlink mobile services could support further revenue growth. However, falling revenue per subscriber may offset part of those gains. Starlink mobile network was providing data, messaging, and internet-based voice services to around 7.4 million monthly unique devices across about 30 countries by the end of the first quarter.

SpaceX may also witness rapid expansion in its network capacity once its next-generation reusable rocket system, Starship, begins deploying the larger V3 Starlink satellites. Each Starship launch carrying V3 satellites is estimated to add more than 20 times as much capacity as a launch of V2 Mini satellites on the currently used Falcon 9 rocket system. This can help Starlink serve more customers and offer more data-heavy services, although the benefit depends on successful Starship launches and continued regulatory approvals.

SpaceX's AI segment presents a much less certain opportunity. The segment remains unprofitable despite ongoing heavy investments in AI infrastructure. Hence, while successful AI contracts could emerge as a key growth engine, the business currently remains a major drain on profits and cash.

What $1,000 could be worth

The projections start with an estimated 2026 revenue of $39.1 billion. Also, assume 1.5% annual equity dilution, which would increase SpaceX's share count to about 13.76 billion by 2029. This appears reasonable given the company's significant pool of shares reserved for employee awards, options, and restricted stock.

In a conservative scenario, assuming 20% annual revenue growth, revenue will reach $67.6 billion in 2029. Applying a conservative price-to-sales multiple close to 10x gives SpaceX a $676 billion market capitalization and a share price near $49. The initial $1,000 would fall to approximately $410.

In my base case, 35% annual growth lifts revenue to $96.2 billion. A price-to-sales multiple close to 15 produces a share price of roughly $105, turning $1,000 into approximately $875.

Finally, in the best-case scenario, 50% annual growth would produce $132 billion in revenue. At a reasonable 20 times sales, SpaceX stock could reach approximately $192, making the investment worth roughly $1,600.

The base case appears most reasonable. Hence, although Starlink can remain a powerful growth business, SpaceX's valuation leaves little room for delays in Starship, AI losses, dilution, or multiple compression.

Manali Pradhan, CFA 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.

U.S. electricity use is expected to reach a record 4,269 billion kilowatt-hours in 2026 and rise further to 4,399 billion kilowatt-hours in 2027, according to the U.S. Energy Information Administration.

The Trump Administration aims to quadruple U.S. nuclear capacity from roughly 100 gigawatts in 2024 to 400 gigawatts by 2050. To support that goal, the Nuclear Regulatory Commission has proposed changes intended to make environmental reviews and reactor licensing more timely and predictable.

Constellation Energy (NASDAQ: CEG) and Cameco (NYSE: CCJ) offer investors two different ways to benefit from this nuclear energy trend. Here is what $5,000 invested in each stock could be worth in 10 years.

Image source: Getty Images.

1. Constellation Energy

Constellation Energy operates the largest nuclear energy network in the U.S. Its acquisition of Calpine added dozens of natural gas and geothermal power plants, expanding the combined company's generating capacity to about 55 gigawatts.

PJM Interconnection, which manages the electricity grid across parts of 13 states and Washington, D.C., holds an annual auction to ensure enough power plants are available when demand peaks. In its latest auction, the price reached the temporary cap of $325 per megawatt-day. PJM estimated it would have risen to $554.72 without the cap. Despite this, the auction secured 6.8 gigawatts less capacity than PJM said it needed. The shortfall suggests dependable power remains scarce, which could support higher earnings for Constellation Energy.

Constellation Energy is also locking in demand and has impressive long-term revenue visibility. The company had secured more than 5,650 megawatts through long-term clean energy agreements as of March 31. Those agreements include a 20-year deal to supply Meta Platforms with power from the Clinton nuclear plant in Illinois and another 20-year deal supporting the planned restart of the Crane Clean Energy Center in Pennsylvania for Microsoft. The company added another 176-megawatt nuclear power agreement with Walmart in June 2026.

Management expects base earnings per share, a non-GAAP measure intended to show the earnings power of Constellation Energy's core business, to grow at an annualized rate of more than 20% from 2026 through 2029. The company is targeting growth of more than 10% in each of the three-year periods after 2029. Constellation estimates base earnings of $6.65 to $6.75 per share in 2026. Using the $6.70 midpoint, management's growth targets would lift base EPS to about $22.56 by 2036. Assuming base earnings account for 70% of total earnings by then, total adjusted EPS could reach roughly $32.23.

Constellation Energy trades at about 21.9 times the midpoint of its 2026 adjusted earnings guidance (as of July 16). Applying a more conservative valuation of 18 times earnings would produce a share price near $580. Based on the company's July 16 closing share price of $251.77, a $5,000 investment could grow to roughly $11,500 by 2036, excluding dividends.

The forecast's accuracy, however, depends on Constellation Energy properly integrating Calpine, managing acquisition debt, and delivering projects tied to its long-term customer agreements. The planned restart of the Crane Clean Energy Center adds another risk because no fully closed U.S. nuclear plant has completed such a restart.

But with its operating plants, long-term contracts, and several earnings drivers, Constellation Energy appears to be a strong nuclear stock for the next decade.

2. Cameco

Cameco operates two of the world's highest-grade uranium mines in Canada and provides uranium refining, conversion, and fuel-manufacturing services. It also owns a 49% equity stake in Westinghouse, which designs and manufactures nuclear fuel and provides maintenance, engineering support, and components for nuclear reactors.

The uranium business already has strong visibility into demand. Cameco exited the first quarter with contracts covering average annual uranium deliveries of more than 28 million pounds through 2030, with higher-than-average delivery commitments from 2026 through 2028. Cameco's core uranium segment's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), a measure of operating profitability, rose 48% year over year to $423 million Canadian. Profits were driven by higher sales volumes and increased prices.

Cameco's share of Westinghouse's adjusted EBITDA also increased 33% year over year to $122 million Canadian in the first quarter.

However, production problems remain an important risk for Cameco. The company temporarily stopped mining at Cigar Lake in Saskatchewan in July after a problem shut down the nearby McClean Lake mill, where the mine's uranium ore is processed. Operations restarted on July 14 and have not yet affected the company's 2026 production forecast. Yet, the disruption showed that Cameco is exposed to problems at both its own mines and at facilities run by business partners.

Analysts now expect Cameco to earn about $1.66 per share in 2026. But its earnings estimate during the next decade could vary widely depending on uranium prices, production volumes, contract pricing, and Westinghouse's growth.

Assuming a conservative 8% annual earnings growth, Cameco's EPS will reach about $3.58 by 2036. Cameco trades at about 82 times trailing earnings. Assuming the valuation falls to 20 times earnings, the stock could trade near $72 by 2036. This would reduce the value of a $5,000 investment made at $87.36 per share to roughly $4,100.

In a base-case scenario, assuming Cameco's EPS grows by 12% annually, earnings would increase from an estimated $1.66 per share in 2026 to about $5.16 per share by 2036. Applying a valuation of 25 times earnings would produce a share price near $129. A $5,000 investment made at Cameco's July 16 closing price of $87.36 could then grow to about $7,400 by 2036, excluding dividends.

Finally, in a bullish scenario, EPS are estimated to grow by 16% annually. Then, at 30 times the estimated 2036 EPS of $7.32, the stock could reach about $220. A $5,000 investment made at Cameco's July 16 closing price of $87.36 would then be worth roughly $12,600, excluding dividends.

The base case appears the most reasonable. The bullish case requires Cameco to sustain unusually strong growth for a commodity-linked business, while the conservative case shows how valuation compression could offset years of earnings gains.

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

The artificial intelligence (AI) spending boom is no longer benefiting just chipmakers or software players. CNBC estimates that Amazon, Microsoft, Alphabet, and Meta Platforms could have nearly $700 billion combined in capital expenditures for 2026, more than 60% above 2025 levels, to expand their AI infrastructure.

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 »

According to Goldman Sachs and Morgan Stanley analysts, AI-related capital spending by U.S. hyperscalers could reach roughly $800 billion in 2026. Morgan Stanley expects it to rise to $1.12 trillion in 2027. A significant portion of that money will be allocated to cooling systems, electrical equipment, and new power plants required for AI facilities.

Vertiv (NYSE: VRT) and Argan (NYSE: AGX) offer two pick-and-shovel plays to invest in this boom. Vertiv supplies power and cooling equipment, while Argan builds power plants.

Vertiv

The company supplies power management, backup power, and air- and liquid-cooling equipment used in data centers.

Demand is already showing up in its results. In the first quarter of fiscal 2026 (ended March 31), revenue rose 30% year over year to $2.6 billion, while adjusted operating margin expanded 4.3 percentage points year over year to 20.8%. Management now expects 2026 revenue of $13.5 billion to $14 billion and adjusted diluted earnings per share of $6.30 to $6.40.

The opportunity is driven not only by the construction of more data centers. AI systems use more high-performance chips in each server rack compared to traditional servers, which increases electricity consumption and heat. This, in turn, raises demand for liquid cooling systems and equipment that can deliver more electricity to each rack.

Vertiv is working with Nvidia on 800-volt direct-current power systems for next-generation AI data centers. Management plans to launch its portfolio in the second half of 2026, aligning with the expected 2027 rollout of Nvidia's Rubin Ultra platform.

Vertiv entered 2026 with a $15 billion backlog, up 109% year over year and exceeding its projected 2026 revenue. Most of these orders are expected to ship within 12 to 18 months, providing visibility into 2027. However, customers can cancel or reschedule orders.

Valuation remains a challenge. The stock trades for nearly 34.8 times analysts' expected 2027 earnings. The premium valuation assumes AI infrastructure demand remains strong, margins stay elevated, and the company expands manufacturing capacity without major supply chain or execution problems.

Investors buying Vertiv today are therefore paying not only for strong growth, but also for exceptional execution during the next several years.

Argan

Argan could benefit from the AI infrastructure boom in multiple ways. Its biggest opportunity comes through two subsidiaries, Gemma Power Systems and Atlantic Projects Company, which build, commission, and maintain natural-gas and renewable-power facilities.

Goldman Sachs expects U.S. data-center power demand to more than double from 31 gigawatts in 2025 to 66 gigawatts in 2027. Argan can serve the rising demand for power generation by building natural gas and renewable energy facilities. Natural gas projects accounted for 79% of the company's backlog at the end of the first quarter of fiscal 2027 (ended April 30). This gives it substantial capacity for power generation that can be tapped when electricity demand rises.

Management's second opportunity comes through its industrial segment, which has a contract to build about 2,000 pressure vessels for thermal energy storage and chilled water-cooling systems at a customer's data centers. The company is also building another North Carolina factory to support that contract and pursue more work.

Lastly, another subsidiary, SMC Infrastructure Solutions, gives Argan a smaller potential opportunity through power distribution, fiber optics, communications, and data network projects. However, management has not disclosed a major AI-specific contract for this business.

In the first quarter, revenue increased 50% to $291 million, while net income more than doubled to $46.1 million. The company exited the first quarter with an order backlog of about $2.8 billion. Total cash, cash equivalents, and investments were about $973.6 million, while the company carried no debt.

The stock already prices in strong execution. It's trading at 39 times forward earnings. However, the order backlog declined from $2.9 billion at the end of January 2026 to $2.8 billion at the end of April.

The company also earns most of its revenue from fixed-price contracts, leaving it exposed to equipment delivery delays, rising labor costs, and other cost overruns. Slower project awards could also make it harder to replace backlog as existing projects are completed.

Argan has several ways to benefit from AI infrastructure spending, but its largest opportunity remains the construction of new power generation capacity. The stock can continue to rise if project awards remain strong and Argan maintains its recent execution pace.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Goldman Sachs Group, Meta Platforms, Microsoft, Nvidia, and Vertiv. The Motley Fool has a disclosure policy.

Blue Origin's May 28 explosion of its reusable, heavy-lift New Glenn rocket was a serious setback. It destroyed the rocket and damaged the only operational launchpad for Blue Origin's heavy-lift rocket program. The company was trying to prove that its rocket could serve major customers, including Amazon's (NASDAQ: AMZN) satellite internet network, NASA's Artemis lunar program, and U.S. national security missions.

CEO Dave Limp expects New Glenn to return to flight before the end of 2026. However, Blue Origin is not just repairing the old setup. Instead, Blue Origin is moving to a new launch process that could help it recover more quickly. But the real test is whether it can fix the reliability problems and prove New Glenn can launch safely on a regular basis.

Image source: Getty Images.

Blue Origin is turning a setback into a redesign

Although Blue Origin lost the lightning tower, transporter-erector, and hydraulic cylinders, several important parts of the launch site survived. The tank farm, integration facility, vehicle access tower, and water tower were still usable or repairable. That makes a full rebuild less likely and a 2026 return easier to believe.

The bigger change is how New Glenn will launch. The company does not plan to replace the old transporter-erector used to move and raise the rocket at the launchpad. Instead, Blue Origin now plans to assemble the rocket in one area, move it to the pad, lift it upright with a crane, and then attach the customer's payload. The company says this approach was already planned for a larger future version of New Glenn.

New Glenn is built for heavy satellite, government, and lunar missions. If Blue Origin can fix the reliability issues, the setback could still help push the company toward a stronger launch system.

Customer demand

New Glenn's recovery matters because Blue Origin has real customers lined up. Amazon plans to use New Glenn for 12 Project Kuiper satellite launches, with options for 15 more. Amazon Leo had deployed around 400 satellites by early July 2026 and expects to begin initial service later in 2026. But with a planned 3,236-satellite network, Amazon still needs many more launches to build meaningful coverage and capacity.

NASA has also contracted with Blue Origin for its second Artemis lunar lander contract. This has tied New Glenn's reliability to Blue Origin's moon plans.

Reuters also reported that Blue Origin is seeking $10 billion in funding at a $130 billion valuation, with Jeff Bezos expected to add $2 billion. The money could help repair launch infrastructure and support New Glenn's return to flight, but investors will expect repeated, reliable launches.

The biggest risk, however, is still reliability. Blue Origin said it was still investigating the May failure, but early signs pointed to the engine area at the bottom of the New Glenn rocket. New Glenn also had a problem in April with its upper rocket section, which left AST SpaceMobile's BlueBird-7 satellite in the wrong orbit.

Blue Origin was already coming off an April flight problem, after which the U.S. Federal Aviation Administration said nine corrective actions had to be verified before the next New Glenn launch. The May 28 ground-test explosion added a separate setback. So even if New Glenn returns to flight in December, Blue Origin will still need repeated safe launches to prove the rocket is reliable.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile and Amazon. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX) has become one of the market's most closely watched stocks after its rapid entry into the Nasdaq-100 index on July 7. Shares are trading close to $149 (as of July 10), still above its $135 IPO price, but nearly 34% below its post-IPO high of $225.60.

This share price pullback has not ended investor interest in SpaceX, but it has changed the debate. Investors are now weighing the company's artificial intelligence (AI) compute opportunity, Starlink satellite internet network's room to expand in satellite communications, and progress on the next-generation reusable rocket system, Starship, as they assess where the stock could trade by the end of 2026.

Image source: Getty Images.

SpaceX has growth drivers for its revenue

SpaceX is already demonstrating impressive financial momentum. Revenue rose 33% year over year to $18.7 billion in 2025. But the company still reported a net loss of $4.9 billion after merging with money-losing xAI.

Starlink remains the key growth engine, supported by roughly 10.3 million users and 9,600 satellites. But AI infrastructure is also becoming the next major catalyst. Alphabet has agreed to pay SpaceX $920 million per month from October 2026 through June 2029 for access to about 110,000 Nvidia GPUs and related computing resources. Anthropic has also signed a major compute-access deal with SpaceX, securing use of SpaceX's Colossus 1 data center. Reuters reported that SpaceX's two deals are worth about $26 billion annually if fully realized.

Although not all the AI revenue from these deals is expected to materialize in 2026, it still gives investors a reason to value SpaceX based on future revenue potential rather than solely on 2025 sales.

SpaceX's valuation will fall, but remain expensive

At the end of 2026, investors will likely be looking toward SpaceX's expected 2027 revenue, since the stock's valuation depends on how quickly Starlink, AI compute, and Starship can expand the company's sales base.

SpaceX's market capitalization is close to $2 trillion. Analysts' 2026 revenue estimates range from $34.3 billion on the low end to $43.2 billion on the high end, with a base case estimate of about $38.9 billion. Hence, SpaceX is already trading at roughly 51.4 times base case 2026 sales. By the end of 2026, that multiple will most likely compress, as post-IPO excitement usually cools and investors demand evidence of execution. But it also does not need to collapse if SpaceX continues to show progress in Starlink, AI infrastructure, and Starship.

A reasonable base-case assumption is that SpaceX's sales multiple compresses by about 20% to 25% from today's 51.4x 2026 sales multiple. That gives a forward price-to-sales (P/S) multiple range of roughly 38.5 to 41 times expected 2027 sales.

Analysts expect SpaceX's 2027 revenue to range from $54.8 billion to $85 billion, with an average estimate of $72.4 billion. Applying a forward sales multiple of 38.5 to 41 times to the 2027 base case revenue estimate yields an implied market capitalization of about $2.79 trillion to $2.97 trillion. Using roughly 13.1 billion shares outstanding, that points to a share price in the range of $213 to $227 at the end of 2026.

Hence, $220 is a reasonable base case estimate. It assumes that while SpaceX's valuation multiple compresses, revenue growth offsets the pressure enough to lift the share price.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.

XRP (CRYPTO: XRP) has a stronger story than it did a few years ago. But investors still need to ask whether the token is priced for what it delivers today or for adoption that has not yet clearly shown up on the XRP Ledger (XRPL), the blockchain network that processes and records XRP transactions.

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 »

XRP has recently been trading in the range of $1.06 to $1.12, giving it a market value of roughly $70 billion. But DeFiLlama recently showed that only $2.87 million of trading occurred on the XRP Ledger over 24 hours, while users paid just $378 in transaction fees. So, although the XRP Ledger is processing transactions, the amount of trading and fees on the network does not yet clearly justify XRP's high market value.

XRP needs more than Ripple's progress

In 2020, the U.S. Securities and Exchange Commission (SEC) sued Ripple, the company backing XRP, arguing that $1.3 billion in XRP was sold as unregistered securities. The uncertainty weighed on XRP because investors and trading platforms did not know whether U.S. regulators would treat ordinary XRP trading as securities activity. The case is now effectively over, with Ripple paying a $125 million fine, though the court still limits some XRP sales made directly to big institutions.

Ripple is also building its ecosystem around XRP. The company has acquired Hidden Road for $1.25 billion, gaining a platform that clears about $3 trillion annually for more than 300 institutional clients.

Ripple USD (CRYPTO: RLUSD), a crypto token pegged to $1, had about $1.58 billion in circulation and $1.68 billion in reserve funds as of June 25. RLUSD strengthens Ripple's payments story because a stablecoin is easier to use for dollar payments than a volatile asset like XRP.

But this is where XRP investors need to be careful. Ripple can build payments, stablecoins, custody, and trading services without all that value flowing to XRP. Additionally, if customers can move dollars with RLUSD, it may limit the extent to which Ripple's growth creates extra demand for XRP itself.

Investors are paying for future demand

Europe is another positive. Ripple received full MiCA authorization in Luxembourg on July 6, allowing it to offer regulated crypto services across the European Economic Area. It is easier for Ripple to sell payment and crypto services to European financial firms. But XRP investors still need to see whether that expanded market access translates into greater actual use of XRP.

Exchange-traded funds (ETFs) let investors buy exposure to an asset through a regular brokerage account instead of buying the asset directly. XRP is already benefiting from that easier access. According to Ripple, U.S. spot XRP ETFs crossed $1.5 billion in cumulative inflows by early March 2026 and held more than 769 million XRP in custody. XRP Insights' tracker showed about 971 million XRP held by U.S. spot XRP ETFs as of early July 2026.

But ETF demand is again not the same as real use of XRP for payments or trading on the XRP Ledger. The Wall Street Journal(https://www.wsj.com/finance/investing/crypto-etfs-boom-downside-8e2535a7) has warned that many newer crypto ETFs are struggling to attract sufficient assets.

Ripple is taking real actions in payments, stablecoins, Europe, and institutional finance. But based on the activity visible on the XRP Ledger today, XRP does look priced for a lot of success that still has to be proven.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.

Space Exploration Technologies' (NASDAQ: SPCX) initial public offering has dramatically increased investor attention around space stocks. One that is definitely worth a closer look is Rocket Lab (NASDAQ: RKLB).

SpaceX is set to join the Nasdaq-100 on July 7, which could drive index-tracking funds to buy the stock. However, SpaceX's initial index weight is estimated to be less than 1%, as the Nasdaq-100 adjusts for public float, or the percentage of shares available for public trading.

So, while SpaceX may dominate the headlines, Rocket Lab's backlog, contracts, and execution milestones still give investors reasons to take the company seriously as a space and satellite stock.

Image source: Getty Images.

Why Rocket Lab Still Matters

Rocket Lab is already demonstrating solid business momentum. In the first quarter, revenue jumped 63.5% year over year to $200.3 million. The company's generally accepted accounting principles (GAAP) gross margin was 38.2%, while backlog rose 20.2% sequentially to $2.2 billion.

The company also signed 31 new contracts for Electron, its small rocket, and HASTE, its defense-focused launch vehicle used for hypersonic testing. The company also added five contracts for Neutron, its larger rocket, which is still under development. Rocket Lab had over 70 contracted launches in its backlog at the end of the first quarter.

SpaceX's IPO has undeniably brought more attention to the space industry, but Rocket Lab's case is not based only on market excitement. Rocket Lab expects second-quarter revenue to fall in the range of $225 million to $240 million, up 16% sequentially at the midpoint.

Rocket Lab is expanding beyond launches

Rocket Lab's planned $8 billion acquisition of Iridium Communications (NASDAQ: IRDM) can prove to be a long-term catalyst. Iridium already operates a low-Earth-orbit satellite network and has more than 2.5 million subscribers across government, aviation, maritime, defense, and enterprise markets. If the deal closes, Rocket Lab would not only build and launch satellites but also operate them. It could also operate a satellite network and sell communication services.

In March 2026, Rocket Lab also signed a $190 million HASTE contract with Kratos Defense & Security Solutions for the U.S. Department of Defense's MACH-TB 2.0 hypersonic testing program. The contract covers 20 hypersonic test flights over four years and is the largest launch contract in the company's history. Hence, Rocket Lab is also building a defense-focused business rather than just competing with SpaceX on regular satellite launches.

Risks to consider

The neutron rocket is important to the company's ambition to handle larger satellites, government missions, and larger commercial missions. However, Rocket Lab has pushed Neutron's first launch target to the fourth quarter of 2026 after a development setback. Any further delay could hurt investor confidence.

Rocket Lab is also still unprofitable. The company reported a net loss of $45 million in the first quarter and expects an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $20 million to $26 million in the second quarter.

Customer concentration and government exposure can also pose risks. In 2025, the company's top five customers accounted for 49% of revenue. The top five backlog customers also accounted for 77% of its backlog. Rocket Lab also earned 47% of its revenue from U.S. government-related contracts, many of which were fixed-price contracts, in 2025.

Investors should closely monitor both growth catalysts and risks before treating Rocket Lab as a simple SpaceX alternative.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kratos Defense & Security Solutions and Rocket Lab. The Motley Fool has a disclosure policy.

The S&P 500 (SNPINDEX: ^GSPC) index closed at 7,537 on July 6, around 1% below its recent record closing high of 7,610 (as of June 2, 2026). The S&P 500 is trading at a forward 12-month price-to-earnings (P/E) ratio of 21.3, above its five-year average P/E of 19.9 and 10-year average of 19.

However, investors do not have to avoid the market altogether. Instead, they can opt to buy shares of the Invesco Nasdaq 100 ETF (NASDAQ: QQQM). This ETF was trading at a forward P/E of 25.1 (as of June 30), according to Invesco. But the ETF offers a more direct exposure to artificial intelligence (AI), cloud computing, semiconductors, and large technology companies that have helped drive the recent market rally.

Image source: Getty Images.

Why QQQM is a smart buy

The Invesco Nasdaq 100 ETF tracks the Nasdaq-100, which is designed to measure the performance of 100 of the largest Nasdaq-listed non-financial companies. Hence, its holdings are heavily exposed to the AI supply chain, including chipmakers, cloud platforms, and large technology companies that use AI across their products.

The Invesco Nasdaq 100 ETF's largest holdings include Nvidia, Apple, Micron Technology, Microsoft, and Amazon. The top 10 holdings also accounted for about 47.4% of the ETF's total assets. Since the ETF is more exposed to the companies driving the AI-led market rally than a standard S&P 500 fund, it may have stronger growth potential than the broader index.

The Invesco Nasdaq 100 ETF also charges a 0.15% management fee. The ETF had 104 holdings and a market value of $98.27 billion as of July 2, 2026. While not the cheapest ETF on the market, it is a low-cost way to track the Nasdaq-100 index.

Additionally, FactSet expects S&P 500 earnings to rise 23.3% year over year in the second quarter and 24.1% for full-year 2026. The strong earnings outlook gives investors a better backdrop for owning growth-focused ETFs.

The risks investors should not ignore

The Invesco Nasdaq 100 ETF is more concentrated, more volatile, and more dependent on a narrow group of winners than ETFs tracking the S&P 500 index. While that structure can help boost investor returns when AI and technology stocks are rallying, it can also hurt returns when investors rotate away from expensive growth stocks.

Inflation is also elevated, with the Consumer Price Index up 4.2% over the 12 months ending in May 2026. The Federal Reserve also kept rates at 3.5% to 3.75% in June, as inflation remains above its 2% goal. If rates stay high for longer, investors may become less willing to pay premium valuations for growth-focused ETFs.

The labor market is another mixed signal. U.S. employers added only 57,000 jobs in June 2026, below Reuters-polled economists' expectation of 110,000. While a softer job market could reduce pressure on the Federal Reserve to raise rates soon, it can also hurt consumer spending and corporate earnings.

So, the Invesco Nasdaq 100 ETF is not the right choice for investors seeking maximum diversification or income. But for long-term investors who want more direct exposure to AI infrastructure, semiconductors, cloud platforms, and the market's most important growth companies, it could be a smarter buy than a standard S&P 500 ETF right now.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Micron Technology, Microsoft, and Nvidia. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX) joins the Nasdaq-100 index on July 7, less than a month after going public. J.P. Morgan, part of JPMorgan Chase, estimates the move could create about $4.3 billion in passive buying by funds tied to the index.

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If OpenAI and Anthropic go public at valuations even close to expected, could they also quickly enter index funds, including the S&P 500? Let's find out.

SpaceX shows the fast path into index funds

The biggest catalyst is Nasdaq's new fast-entry rule. Under the updated Nasdaq-100 methodology, the largest new listings can be reviewed on their seventh trading day if their full market value ranks among the top 40 current Nasdaq-100 companies. The companies also need to meet Nasdaq's eligibility rules and have enough trading liquidity.

Nasdaq may consider both listed and unlisted shares when determining eligibility and ranking, but the company's actual weight in the index is based only on listed shares. So OpenAI and Anthropic could go public at high valuations, but their impact on the index would depend on how many shares are actually listed for trading, not just on their total market value.

The Nasdaq-100 includes large non-financial companies listed on the Nasdaq. So OpenAI or Anthropic would probably need a Nasdaq listing to follow SpaceX's clearest fast-entry route.

Although SpaceX's fast index entry can be a short-term growth catalyst for the stock, it does not automatically make the stock safer or cheaper. Index funds buy stocks because they meet index rules, not because the business is risk-free or attractively valued.

Upcoming IPOs

According to Reuters, OpenAI has already filed confidentially for its IPO and is targeting a valuation close to $1 trillion. OpenAI already has massive scale, with more than 900 million weekly ChatGPT users, more than 50 million paying consumers, and about $2 billion in monthly revenue (as of March 2026). However, the company is reportedly not expected to be profitable until 2030. Hence, although OpenAI's scale could quickly attract index attention, its long profitability timeline may keep valuation risk high.

Anthropic is also moving toward the public market. The company said it has confidentially filed its IPO paperwork. It also raised $65 billion in new funding, giving it a valuation of $965 billion in May 2026. A valuation that large could make Anthropic important to broad-market indexes soon after listing. The funding also shows how much money frontier AI companies need to keep expanding their computing capacity.

Hence, a public OpenAI or Anthropic would give index investors direct exposure to frontier AI model companies, not just the infrastructure companies powering them.

Inclusion in the S&P 500 can be harder

The biggest risk is assuming that a company's quick index inclusion can also translate into quick inclusion in the S&P 500. However, S&P Dow Jones Indices, part of S&P Global, recently decided not to loosen its main eligibility rules for the S&P 500, S&P MidCap 400, and S&P SmallCap 600. So newly public companies will still need at least 12 months of trading history before they can be considered for inclusion in these indexes. They also need to pass S&P's profitability test, which usually requires positive GAAP net income in the latest quarter and over the past four quarters combined.

OpenAI still has a long road to profitability. Anthropic's heavy computing needs could also make S&P's profitability screen a harder hurdle.

However, S&P Dow Jones Indices changed eligibility rules for the S&P Total Market Index, S&P Completion Index, and Dow Jones U.S. Total Stock Market Index. Eligible IPOs can still get fast-track entry into some indexes if they meet the updated float and other requirements. So OpenAI and Anthropic could enter these market indexes soon after going public.

Regulation challenges are also important for investors. According to Reuters, OpenAI seems to be considering giving a 5% stake to the U.S. government. Anthropic also had to disable access to its top-tier models after a U.S. government order limiting foreign access. While these challenges may not prevent either company from entering certain indexes after listing, they may negatively affect IPO timing, valuation, revenue visibility, and post-listing volatility.

SpaceX shows that mega IPOs can quickly enter some index funds, especially through Nasdaq-linked and broad-market products. Investors should focus not only on whether these companies enter indexes, but also on which indexes they enter, how much weight they receive, and whether the businesses can justify their valuations after the first wave of passive buying.

JPMorgan Chase is an advertising partner of Motley Fool Money. Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and S&P Global. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX), otherwise known as SpaceX, is joining the Nasdaq-100 index today. This means that exchange-traded funds (ETFs) tracking the index, including the Invesco QQQ Trust (NASDAQ: QQQ), will soon own the stock indirectly.

J.P. Morgan, part of JPMorgan Chase, expects this index inclusion to trigger about $4.3 billion in passive buying from index-tracking funds. Although this will serve as a clear near-term demand catalyst for SpaceX, Invesco QQQ Trust investors are also getting exposure to a founder-controlled company with a limited number of publicly traded shares (float) and an unprofitable business.

Image source: Getty Images.

Why SpaceX's Nasdaq-100 entry matters for QQQ investors

Invesco QQQ Trust tracks the Nasdaq-100, which includes the 100 largest non-financial companies listed on Nasdaq.

SpaceX's quick entry became possible because the Nasdaq-100 changed its inclusion rules in 2026. Starting May 1, large newly public companies like SpaceX can be added after just 15 trading days if they rank among the top 40 eligible Nasdaq-listed companies. However, if only a limited number of shares are publicly traded, Nasdaq can limit how much weight the stock gets in the index. The change reflects today's market, where some very large companies stay private for longer and list with only a limited number of shares available for public investors.

SpaceX's Nasdaq-100 inclusion will give Invesco QQQ Trust investors exposure to the space, satellite broadband, and artificial intelligence (AI) infrastructure company before S&P 500 (SNPINDEX: ^GSPC) index fund investors get it automatically. Reuters reported that SpaceX would need at least 12 months of public trading history, generally accepted accounting principles (GAAP) profitability, and a public float of at least 10% before it can be considered for inclusion in the S&P 500. However, according to Reuters' estimates, SpaceX's public float is only 3% to 4%. The company also posted a $4.94 billion net loss in 2025.

Since only a small portion of SpaceX shares is available for public trading, buying by funds that track the Nasdaq-100 can have a bigger effect on the stock price. But once that buying is complete, the same limited supply of tradable shares can also make the stock move more sharply if investors start selling. So, Invesco QQQ Trust investors should ask whether SpaceX's Nasdaq-100 inclusion has already lifted the stock enough to limit its near-term gains.

Starlink is the key business to watch

The best reason for Invesco QQQ Trust investors to take SpaceX seriously is its Starlink satellite internet business. SpaceX generated $18.7 billion of revenue in 2025, with the Starlink-powered connectivity business accounting for about 60% of total sales. The business had about 10.3 million users across roughly 9,600 satellites at the end of the first quarter.

Starlink is SpaceX's clearest profit engine and is helping offset losses from the company's other growth initiatives. In the first quarter, the connectivity segment generated $1.2 billion of operating profit. But SpaceX still reported a total operating loss of $1.9 billion on $4.7 billion of revenue.

SpaceX's reusable Falcon 9 rocket has helped make the company a leading launch provider for NASA, the Pentagon, and commercial customers. According to Reuters, SpaceX has gone from one launch in 2006 to more than two launches per week, giving it a much faster launch pace than its rivals.

The Federal Communications Commission has approved SpaceX to deploy another 7,500 second-generation Starlink satellites, bringing the approved Gen2 satellite count to 15,000. More satellites should give Starlink more network capacity, which can support faster broadband and mobile connectivity service, as well as growth in aviation, maritime, enterprise, and government markets.

Additionally, if the next-generation reusable rocket system, Starship, works at commercial scale, it could lower launch costs and help SpaceX deploy larger, higher-capacity satellites faster.

Investors are getting growth, but also uncertainty

The biggest risk is that Invesco QQQ Trust is being required to buy an expensive story. SpaceX currently trades at nearly 81 times trailing-12-month sales, even though it is a money-losing business.

SpaceX's AI business could become a major long-term growth engine, especially after Anthropic agreed to pay SpaceX $1.25 billion per month through May 2029 for compute capacity. But investors should not treat that as guaranteed revenue. Reuters reported that either company can terminate the agreement with 90 days' notice, and that fees are lower during the ramp-up period. The company is also spending heavily on an AI infrastructure business that is not yet profitable. In the first quarter, the AI segment reported an operating loss of nearly $2.5 billion on $818 million of revenue.

Additionally, Chief Executive Officer Elon Musk accounts for 82.3% of SpaceX's voting power. Hence, although public investors may own the stock, they will have little control over major company decisions. So, Invesco QQQ Trust investors are getting automatic exposure to a company where major decisions will remain heavily shaped by Musk, not by public shareholders.

NASA's inspector general said SpaceX's Artemis III Starship work has faced delays, while refueling the vehicle in space remains one of the biggest technical challenges. With Starship being crucial to SpaceX's plan to launch more satellites at lower cost and support NASA's moon missions, it also adds to the company's execution risk.

Invesco QQQ Trust investors should not panic over one index addition. SpaceX will likely be a modest initial QQQ position because of its limited float. But investors should recognize that QQQ is becoming a slightly more aggressive fund, with higher valuation risk, more execution risk, and more Musk-specific governance risk.

While SpaceX's addition is not a reason to abandon the ETF, it should also remind investors that the Invesco QQQ Trust is not a broad-market fund. Investors should watch Starlink profits, AI losses, Starship progress, and future earnings reports before assuming this index addition is automatically good news.

JPMorgan Chase is an advertising partner of Motley Fool Money. Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

Space Exploration Technologies' (NASDAQ: SPCX) first few weeks as a public company have already reminded investors that even great businesses can become volatile stocks. SpaceX shares surged in the days after the company went public in early June 2026, hitting an intraday high of $225.64.

Image source: Getty Images.

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Since then, the stock has pulled back and is down to around $162. The stock remains above its $135 IPO price and is still far from cheap. But the sell-off has made the risk-reward question more interesting.

Here are a few factors for investors to consider before buying a stake in this dominant space, satellite internet, and AI infrastructure company.

Starlink is a profitable business

The clearest reason supporting the contrarian case for SpaceX is its Starlink satellite internet business. Starlink-powered connectivity business contributed about 60% of SpaceX's $18.7 billion in revenue and generated $4.4 billion in operating income in 2025. Starlink also had 10.3 million users at the end of the first quarter of 2026. Although SpaceX posted a $4.94 billion net loss in 2025, Starlink gives the company a profitable business that can help fund its broader growth ambitions.

Additionally, the Federal Communications Commission approved SpaceX to deploy 7,500 additional second-generation Starlink satellites, bringing the authorized Gen2 satellite count to 15,000. This approval should help the company increase broadband capacity, expand mobile connectivity services, and improve global coverage over time.

AI-powered demand and index addition

SpaceX's AI infrastructure business is already securing major customer commitments. Alphabet agreed to pay SpaceX $920 million per month from October 2026 through June 2029 for compute capacity, including access to about 110,000 Nvidia GPUs. Anthropic has also agreed to use the full computing power of SpaceX's Colossus 1 facility, which houses more than 220,000 Nvidia processors and will provide the Claude maker with 300 megawatts of new capacity. According to Reuters, the two compute deals are worth about $26 billion annually if contracts are not terminated before their scheduled end dates.

SpaceX is also set to join the Nasdaq-100 on July 7, giving it a place in an index of major nonfinancial companies listed on the Nasdaq. According to estimates from J.P. Morgan cited by Reuters, funds tracking the index may need to buy about $4.3 billion of SpaceX shares to reflect the company's addition.

Short interest has also climbed to 196 million shares, or about 31% of the shares available for public trading. While these investors are betting against SpaceX, if the stock starts rising again, some of those short sellers may have to buy shares to close their positions. This could further fuel the stock's rebound.

Certain risks cannot be ignored

SpaceX is trading at nearly 81 times trailing-12-month sales. This is a demanding multiple for a company that is still loss-making and spending heavily on several growth initiatives.

The next-generation reusable rocket system, Starship, could become a major long-term growth driver for SpaceX. But NASA's inspector general has warned that delays and the challenge of refueling the vehicle in space still make it a major execution risk.

SpaceX may be worth considering for investors comfortable with a premium valuation and significant execution risk.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.

Marvell Technology (NASDAQ: MRVL) has firmly positioned itself as one of the world's more prominent artificial intelligence (AI) infrastructure companies. The stock traded near $272.05 as of July 1, giving Marvell a market value of about $238 billion.

But Nvidia CEO Jensen Huang has put a much bigger number into the discussion, calling Marvell the "next trillion-dollar company" during Computex week in Taipei, according to Reuters.

Image source: Getty Images.

A $1 trillion market cap would require the company's value to grow about 4.2 times, or roughly 33.2% annually over five years and 22.7% annually over seven years. The key question is whether Marvell can grow fast enough, for long enough, to reach a $1 trillion market cap.

Marvell's AI growth is already showing up in the numbers

In the first quarter of fiscal 2027 (ending May 2), Marvell's revenue rose 28% year over year to nearly $2.4 billion, while operating cash flow reached a record $639 million. Management also expects fiscal 2027 revenue to be roughly $11.5 billion, up 40% year over year.

The data center business is the key growth engine. Management expects data center revenue to grow about 50% year over year in fiscal 2027 and 55% in fiscal 2028. Marvell is benefiting from rising demand for interconnects, switches, and custom chips, all of which help large AI systems move and process data more efficiently. The company estimates interconnect product revenue will grow 70% year over year in fiscal 2027. Marvell also expects the custom chip business to exceed $10 billion in revenue by fiscal 2029.

Nvidia's $2 billion investment adds credibility to that growth story. The company has partnered with Marvell to integrate Marvell's custom AI chips and networking technology more closely with Nvidia's AI infrastructure. Next-generation AI systems are being limited not only by computing power but also by how quickly and efficiently data can move across chips and servers. They are also working on optical connections, which use light to move data faster and more efficiently as AI systems get larger.

Marvell is also expanding through acquisitions. Celestial AI adds optical interconnect technology that can help move data across large AI networks with higher bandwidth, lower power use, and lower latency. XConn adds switching technology that can improve data movement across next-generation AI and cloud data centers.

Is a trillion-dollar market capitalization achievable?

Calculations show why Marvell's path to a $1 trillion market value is possible, but not easy. Analysts expect the company's revenue to reach around $33.1 billion in fiscal 2031, nearly $48.6 billion in 2033, and $58.8 billion in fiscal 2036. At those revenue levels, the multiple required for a $1 trillion valuation falls over time. Marvell would need to trade at about 30 times fiscal 2031 sales, about 20.6 times fiscal 2033 sales, or about 17 times fiscal 2036 sales.

Hence, a 2031 timeline appears possible only if investors continue to value Marvell as one of the fastest-growing AI infrastructure players. A 2033 timeline looks more plausible, although the price-to-sales multiple will still be premium. A 2036 timeline is more conservative because Marvell could reach the same valuation at a much lower multiple if it continues to compound revenue.

If Marvell continues to scale custom chips, interconnects, and switching while data center demand remains strong, the early 2030s could be the most realistic window for a trillion-dollar valuation.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Marvell Technology and Nvidia. The Motley Fool has a disclosure policy.

Wedbush analyst Dan Ives has put the likelihood of a merger between Tesla (NASDAQ: TSLA) and Space Exploration Technologies (NASDAQ: SPCX) at more than 80% over the next year, as the potential deal fits Elon Musk's broader artificial intelligence (AI) and data strategy.

Tesla invested $2 billion in SpaceX earlier in 2026, and that investment has given Tesla nearly 19 million SpaceX shares, representing less than 1% of SpaceX's outstanding shares.

Now, the bigger question for Tesla investors is whether a full merger would create a stronger AI, energy, connectivity, and robotics platform or dilute Tesla shareholder value by adding SpaceX's losses, heavy spending needs, and governance risks.

Image source: Getty Images.

Increasing credibility of the merger case

SpaceX's June 2026 IPO has given the company a public stock price for the first time, which makes a possible stock-based merger of the two Elon Musk companies easier to value and structure.

SpaceX would bring a growth engine that Tesla does not have. In 2025, SpaceX revenue rose to $18.7 billion, with the Starlink-powered connectivity unit accounting for about $11.4 billion of sales. Starlink's satellite internet user base had reached nearly 10.3 million by the end of the first quarter of 2026. If Tesla and SpaceX merge, Starlink would add a recurring-revenue business tied to satellites, consumer connectivity, and future mobile services.

Tesla is already spending heavily on AI, robotics, custom chips, and manufacturing capacity. The company raised its 2026 capital spending plan to more than $25 billion, up from its earlier $20 billion forecast. Tesla also expects negative free cash flow for the rest of 2026, despite generating $1.44 billion in free cash flow in the first quarter.

A merger with SpaceX could position Tesla as a broader platform company and create a more vertically integrated platform spanning AI, energy, mobility, and connectivity. Tesla would bring vehicles, robotaxis, Optimus robots, energy storage, and software-led services that generate customer demand. SpaceX would bring satellites, launch capacity, mobile connectivity, AI infrastructure, and xAI-related software needed to connect, power, and scale that platform.

Potential synergies

Reuters reported that SpaceX and xAI bought about $650 million in goods and services from Tesla in 2025, including $506 million in Tesla Megapack batteries and $131 million in Cybertrucks. With Tesla already supplying energy storage and vehicles to other Musk-controlled businesses, a merger could build on existing business relationships rather than relying solely on promised future synergies.

Tesla's energy storage business could generate an estimated $18.3 billion of revenue in 2026, with gross profit of about $5.3 billion and gross margin near 29%. Since SpaceX and its xAI need large-scale power storage for AI and communications infrastructure, Tesla's Megapack business could become a more strategic internal supplier.

Reuters has also reported that SpaceX, xAI -- which it acquired -- and Tesla plan to build two advanced chip factories at the Terafab facility in Austin, Texas, including one for Tesla vehicles and Optimus robots and another for future AI data centers in space. Tesla and SpaceX are also working on Macrohard , an early-stage AI platform designed to automate digital workflows and improve how people work with computers. These projects make the case for a merger more concrete by showing that Tesla and SpaceX may already be developing shared technology, not just operating under the same CEO.

The Federal Communications Commission has approved 7,500 additional Gen2 Starlink satellites, bringing SpaceX's permitted Gen2 capacity to 15,000 satellites. SpaceX is also pushing deeper into direct-to-cell and U.S. mobile services. Over time, that could help Tesla's vehicles, robotaxis, charging sites, and energy assets stay connected. However, this is more of a future opportunity than something likely to add meaningful revenue right away.

SpaceX's next-generation Starship reusable rocket system is designed to carry more than 100 metric tons to orbit. If it works reliably, SpaceX could deploy larger satellite networks and future space-based infrastructure at lower cost, strengthening a combined company's infrastructure story. But investors should also treat this as a major execution risk, not a guaranteed advantage.

Tesla investors face risks

The biggest challenge for a merger deal would be SpaceX's rich valuation. As I write this, the company trades at 77 times trailing-12-month sales, despite posting a $4.9 billion net loss in 2025. The company's AI business also had a $6.4 billion operating loss in 2025 and accounted for $12.7 billion of the company's capital expenditures that year. A merger could move those losses, capital needs, and AI-infrastructure risks closer to Tesla shareholders.

Tesla also has major execution risks of its own. Reuters found that its robotaxi service in Texas still faced long wait times, limited availability, navigation problems, and safety challenges in some vehicles. If Tesla is still proving vehicle autonomy and SpaceX is still proving AI infrastructure, a merger would combine two long-term bets rather than clearly reducing risk.

CEO Elon Musk reportedly controlled 42.5% of SpaceX's equity and 83.8% of its voting power before the IPO. After the offering, Musk was expected to retain about 82.4% of SpaceX's voting power. He also owns around 19.9% stake in Tesla's common stock.

Musk's level of influence could make a Tesla-SpaceX deal easier to pursue, but it also makes fairness more important. Tesla shareholders would need confidence that the deal price properly reflects SpaceX's losses, Tesla's own growth potential, and the companies' existing business ties.

So, the real question for shareholders is whether the deal would create more value than Tesla and SpaceX could create separately. Until investors see terms, valuation, board process, and a clearer path from synergy to cash flow, a potential merger should be treated as a serious possibility rather than a proven value creator.

Manali Pradhan, CFA 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.

Space Exploration Technologies (NASDAQ: SPCX) is testing how much investors are willing to pay for a company that controls valuable space infrastructure.

SpaceX currently trades at a very rich valuation of nearly 82 times trailing 12-month sales. The stock's sharp rise after the IPO, followed by a pullback, suggests investors are still trying to decide how much of SpaceX's long-term opportunity is already reflected in its valuation.

Image source: Getty Images.

Starlink and Starship are the key growth catalysts

Starlink satellite internet is the clearest reason for SpaceX's premium valuation. The company's connectivity business, driven mainly by Starlink, generated $11.4 billion in revenue and $4.4 billion in operating income in 2025. Starlink also had about 10.3 million users across 9,600 satellites at the end of the first quarter of 2026. Unlike launch sales, which can be lumpy, Starlink gives SpaceX a profitable recurring revenue engine, global reach, and a direct customer relationship.

SpaceX's next-generation reusable rocket system, Starship, is expected to carry 100 metric tons to orbit. This will give the company far greater capacity to launch larger Starlink satellites, expanding the network faster and at lower cost. The larger next-generation Starlink satellites are designed to support more than 10 times the internet download capacity of the smaller V2 satellites SpaceX currently launches on its Falcon 9 rocket system.

What could $1,000 become by 2031?

SpaceX is also spending heavily on artificial intelligence (AI) infrastructure. The company's AI business posted an operating loss of $6.4 billion, accounting for nearly 61% of its $20.7 billion in capital spending in 2025.

So, for SpaceX to justify its premium valuation, Starlink must keep growing, Starship must make satellite deployment cheaper, and AI infrastructure must eventually become profitable.

Since 2023, Nvidia's price-to-sales ratio has stayed mostly above 20 times. SpaceX is not Nvidia, but if investors keep viewing it as a leader in low-Earth-orbit connectivity and launch infrastructure, 18 to 25 times sales multiple could be a defensible five-year estimate.

Analysts expect SpaceX to generate about $224.8 billion of revenue in 2031. This may prove conservative, considering that CEO Elon Musk expects revenue to reach $1 trillion by 2031. Goldman Sachs and Morgan Stanley expect SpaceX's revenue to be $470 billion and $330 billion, respectively, in 2030.

If SpaceX reaches the 2031 revenue estimate and trades at around 11 times sales, its market capitalization would be around $2.47 trillion. This cautious valuation is close to Rocket Lab's sales multiple at the end of 2023, before investor enthusiasm for vertically integrated space platforms pushed the stock much higher.

Based on roughly 13.1 billion shares outstanding, that would imply a share price near $188, turning a $1,000 investment at about $170.80 per share (as of June 30, 2026) into roughly $1,100. At 18 times sales, SpaceX would be valued at about $4.05 trillion, implying a share price near $307 and a $1,000 investment value of roughly $1,797. At 25 times sales, SpaceX would be worth about $5.62 trillion, implying a share price near $427 and a $1,000 investment value of roughly $2,499.

Hence, $1,000 invested in SpaceX today could grow to about $1,100 to $2,499, depending on whether investors apply a cautious premium valuation or a category-leader multiple.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, Nvidia, and Rocket Lab. The Motley Fool has a disclosure policy.

Amazon (NASDAQ: AMZN) and Space Exploration Technologies (NASDAQ: SPCX) are both trying to become more important to consumers' digital lives.

Amazon already affects how people shop, watch shows, subscribe to services, use smart-home devices, and interact with cloud-powered technology. SpaceX is using Starlink satellite broadband and direct-to-cell service to bring internet access to consumers.

Image source: Getty Images.

Amazon generated $716.9 billion in net sales in 2025, while SpaceX generated just $18.7 billion in revenue. While that size gap does not automatically make Amazon a better stock, it shows the different risk profiles investors are dealing with.

Amazon is already monetizing consumer behavior at scale

Amazon's biggest advantage is that it is already embedded in consumers' daily behavior. In 2025, the company generated $269.3 billion in sales from online stores, $172.2 billion from third-party seller services, $68.6 billion from advertising, $49.6 billion from subscriptions, and $128.7 billion from its AWS cloud computing business. Hence, Amazon earns money at several points in the consumer journey, from product discovery and advertising to subscriptions, transactions, seller services, and cloud infrastructure.

Its advertising business is also gaining momentum, with revenues rising 24% year over year to $17.2 billion in the first quarter. Many Amazon advertisements appear when shoppers are already comparing products or getting ready to buy. The company's advertising business is proving to be a competitive edge because Amazon is monetizing purchase intent, not just screen time.

Amazon's relationship with consumers also extends well beyond shopping. Prime, Prime Video, Kindle, Fire TV, Echo, Ring, Blink, and eero give the company multiple ways to connect to customers across entertainment, reading, smart-home devices, home security, subscriptions, and Wi-Fi.

Beyond all of that, though, AWS continues to be a key growth engine. In the first quarter, AWS revenue rose 28% year over year to $37.6 billion, while AWS operating income reached $14.2 billion, up from $11.5 billion in the prior-year period. The company's large and highly profitable cloud computing business will play a pivotal role in Amazon's artificial intelligence (AI) ambitions.

Amazon possesses the consumer data and cloud infrastructure to support more personalized shopping tools, smarter ads, better digital assistants, and cloud services for companies building their own AI products. The company recently launched Alexa for Shopping, a new AI shopping assistant built from Rufus and Alexa+. Rufus helps shoppers compare products and answer shopping questions, while Alexa+ adds a more conversational and personalized experience across Amazon's app, website, and devices.

The AWS AI infrastructure is also supported by large customer commitments. OpenAI has committed to lease approximately 2 gigawatts of computing capacity powered by Amazon's custom Trainium chips. Anthropic has also committed to securing up to 5 gigawatts of Trainium capacity. Meta Platforms has signed an agreement to deploy tens of millions of Amazon's custom Graviton server chips to support AI workloads.

Amazon Leo, formerly known as Project Kuiper, is the company's low Earth orbit satellite internet network. As of mid-June, the constellation had grown to 367 satellites, and the company has secured more than 100 rocket launches to deploy additional satellites. It's becoming a formidable player in the satellite broadband market.

Additionally, Amazon's agreement to acquire Globalstar could help Amazon Leo connect directly to phones for voice, data, and messaging services beginning in 2028. The company has also entered into a multiyear agreement with Delta Air Lines to install Amazon's Leo satellite technology on its aircraft, with an initial installation on 500 planes starting in 2028.

However, the main risk for Amazon is its elevated spending. Amazon's trailing-12-month free cash flow fell sharply in the first quarter as its AI-related infrastructure spending rose. The company also faces regulatory pressure and heavy competition.

Yet, Amazon is funding these bets from a much stronger profit base than SpaceX.

SpaceX is trying to move closer to consumers through Starlink

The biggest way SpaceX could move closer to consumers is through Starlink mobile.

SpaceX already offers direct-to-cell satellite technology with T-Mobile US in the U.S, allowing compatible phones to connect through Starlink when they are in locations where regular tower coverage is weak or unavailable. According to Reuters, SpaceX also plans to launch a Starlink mobile service via a consumer mobile plan or a mobile connectivity product for U.S. consumers, which could put it in direct competition with Verizon Communications, AT&T, and T-Mobile US. This could position SpaceX as a prominent consumer telecommunications player.

With nearly 10.3 million subscribers, Starlink is already a meaningful consumer internet business. If it expands into mobile service, Starlink could become more useful for travel, emergency coverage, and areas with weak cellular networks.

SpaceX is also expanding its satellite capacity for a larger Starlink business. In January, the Federal Communications Commission approved the company's request for permission to deploy an additional 7,500 Gen2 Starlink satellites, which would bring SpaceX's authorized network to 15,000. More satellites will help Starlink improve coverage, support direct-to-cell service, and eventually offer faster mobile applications. SpaceX's recent purchase of wireless spectrum from EchoStar is also significant because spectrum is essential for expanding wireless connectivity.

However, investors should not view Starlink mobile as a full replacement for regular wireless networks or 5G service yet. And the bigger issue for investors is valuation and execution risk. SpaceX still trades at about 82 times trailing-12-month sales even after its post-IPO pullback. That type of ambitious valuation is particularly difficult to justify for a company that is still relying heavily on Starlink's profits while pouring funds into rockets, AI infrastructure, spectrum expansion, and mobile ambitions. The Starship rocket, which has yet to carry a commercial payload, is especially important because it could help SpaceX launch larger satellites and expand Starlink capacity more efficiently, but delays would weaken a major part of the company's growth story.

SpaceX can prove a more disruptive connectivity story if Starlink mobile becomes a widely used consumer wireless platform. But Amazon looks like the stronger risk-adjusted winner in the race to own a piece of consumers' digital lives.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Meta Platforms. The Motley Fool recommends Delta Air Lines, T-Mobile US, and Verizon Communications. The Motley Fool has a disclosure policy.

The initial public offering (IPO) market in 2026 is testing how much new equity supply investors can absorb without selling the stocks that already drove the market higher. Renaissance Capital data shows that 79 U.S. IPOs have already raised $112.5 billion so far in 2026, up 625% year over year.

Image source: Getty Images.

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JPMorgan Chase expects more than $260 billion of equity issuance to enter the market in 2026. With multiple IPOs, such as Space Exploration Technologies (NASDAQ: SPCX), OpenAI, and Anthropic, in focus, the key question is where investment capital will come from.

SpaceX, OpenAI, and Anthropic could test market absorption

SpaceX has already shown how much demand there can be for a mega-IPO. The company initially raised $75 billion at a valuation of about $1.77 trillion, and total proceeds later rose to $85.7 billion after underwriters bought additional shares.

OpenAI could create the next big demand for investor cash. Reuters has reported that the company could seek a valuation of up to $1 trillion, although its IPO may not arrive until 2027. A 2026 listing would add pressure to a market already absorbing the impact of the SpaceX IPO, while a delay to 2027 would spread that pressure over a longer period. Reuters also reported that Anthropic confidentially filed for a U.S. IPO after a funding round valued it at $965 billion.

While the $200 billion risk is not a confirmed total from the three companies, it is a plausible scenario based on SpaceX's completed IPO, OpenAI's reported IPO ambitions, and the possibility of another large Anthropic offering. If OpenAI and Anthropic both list near trillion-dollar valuations, these IPOs may compete with existing AI winners for the same investor dollars.

Why the IPO wave could impact the entire equity market

In their research paper, "In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis," Xavier Gabaix and Ralph Koijen estimate that every $1 invested in stocks can add about $5 to total market value. That is because stock prices can move much more than the actual dollars entering or leaving the market. So, if investors sell stocks to fund new IPOs, the market impact could be several times larger than the cash raised. Hence, using a five-times multiplier, a $200 billion IPO wave could put roughly $1 trillion of market value at risk.

However, that does not mean a crash is inevitable. It means a very large IPO wave can create pressure far beyond the cash raised if buyers fund allocations by selling existing stocks. The risk is greater because the current market is already tied closely tied to artificial intelligence (AI). Goldman Sachs expects S&P 500 (SNPINDEX: ^GSPC) earnings per share to rise 24% year over year to $340 in 2026, with AI infrastructure beneficiaries contributing roughly half of that growth.

But there is also a reason the market may be able to handle these IPOs. J.P. Morgan estimates that 2026 buybacks could reach about $1.5 trillion, returning cash to shareholders that could help fund some new IPO demand. The research firm also argues that, since the current market is much larger than in past IPO cycles, investors may have greater capacity to absorb new listings. Still, investors should watch the timing, valuation, float, and first trading response of IPOs to decide whether there is fresh AI demand or a shortage of fresh capital.

JPMorgan Chase is an advertising partner of Motley Fool Money. Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool has a disclosure policy.

Americans are still spending, but they are getting more cautious and looking for deals. A recent University of Michigan survey showed that Americans expect inflation to be 4.6% over the next year, down slightly from an expectation of 4.8% in May.

On the first day of Amazon's Prime Day event, U.S. online spending rose 5.3% year over year to $8.3 billion across retailers, according to Adobe Analytics, a part of Adobe, which expected the four-day event to drive $26.3 billion in U.S. online spending. Meanwhile, Costco Wholesale's (NASDAQ: COST) May sales rose 14.5% year over year to $20.95 billion. This shows that value-oriented platforms can still win when shoppers are under pressure.

Image source: Getty Images.

However, certain areas of the consumer economy are under strain. Beyond Meat's first-quarter revenue fell 15.3% year over year to $58.2 million, with the company citing weak demand and reduced distribution in certain channels. Conagra Brands also showed that certain food categories are not immune. In the third quarter of its fiscal 2026 (ending Feb. 22, 2026), the company's sales and adjusted earnings per share dropped 1.9% and 23.5%, respectively.

But what about a company like Space Exploration Technologies (NASDAQ: SPCX)? After all, you can't buy its products at the store or in an online marketplace. But its Starlink provides internet service to consumers. Starlink had 10.3 million subscribers across 164 markets at the end of the first quarter of 2026, supported by more than 9,600 broadband and mobile satellites in low earth orbit.

SpaceX's Starlink network serves individuals, governments, and businesses and is expanding to aviation and maritime, according to Reuters. Subsequently, Starlink demand is more closely tied to connectivity needs than to ordinary discretionary spending, so I don't think the consumer spending trends are an influence here.

Other risks

Instead of consumer weakness, investors should focus on other risks. SpaceX generated $18.7 billion in revenue in 2025, but it also posted a $4.9 billion net loss. The company also trades at around 110 trailing 12-month sales on June 30, a premium valuation that leaves little room for mistakes.

Starlink's monthly average revenue per user (ARPU) fell to $66 in the first quarter of 2026, down from $86 in the previous year. Starlink needs to expand its customer base without sacrificing too much pricing power or margins.

SpaceX is also exposed to significant execution risk with its next-generation Starship reusable rocket system. The success of Starship will determine whether the company can launch larger Starlink satellites and rapidly expand network capacity, while lowering launch costs. SpaceX is also spending heavily on artificial intelligence infrastructure.

This all points to the fact that a weaker consumer is not the most immediate challenge to SpaceX's investment thesis. Instead, investors should assess the company's rich valuation, Starlink pricing pressures, Starship execution risk, and AI spending before investing in this stock.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Amazon, Beyond Meat, and Costco Wholesale. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.