PayPal (NASDAQ: PYPL) was a potential buyout target, but the two companies interested in acquiring it recently abandoned their plans. In this video, I'll discuss what this means for the stock and what I'm planning to do with my PayPal shares now.

*Stock prices used were the morning prices of Sept. 3, 2026. The video was published on Sept. 6, 2026.

Matt Frankel, CFP® has positions in PayPal and has the following options: long January 2027 $75 calls on PayPal, long January 2027 $95 calls on PayPal, short January 2027 $135 calls on PayPal, and short January 2027 $85 calls on PayPal. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short December 2026 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.

Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

For the first time in recent memory, the market doesn't have much of an idea of what the Federal Reserve will do with interest rates at its September meeting. We're less than two weeks away from the Fed's decision, and investors aren't sure whether to expect a rate hike for the first time since 2023 or if the Fed will hold rates steady.

According to the CME FedWatch tool, which monitors how the market is pricing future interest rate movements, there's roughly a 40% chance that rates won't move and a 60% chance of a rate hike. Roughly half of the voting committee favors a hike, and Chair Kevin Warsh didn't offer any forward guidance at Jackson Hole last week. In short, there is considerable uncertainty.

Image source: Getty Images.

Because of this uncertainty, many investors feel it's time to pump the brakes on investing or do something different with new money. But there are some investments that make sense for long-term investors regardless of what the stock market is doing, or how much economic uncertainty there is. One of them is the Vanguard S&P 500 ETF (NYSEMKT:VOO).

What is the Vanguard S&P 500 ETF?

The Vanguard S&P 500 ETF is an exchange-traded fund that is designed to track the performance of the S&P 500 index over time, net of fees. It owns all 500 stocks in the index, using the same weights as the index does, to replicate its performance.

It is a very low-cost way to get exposure to the index that most experts consider the best barometer of how U.S. businesses are doing. Its 0.03% expense ratio means your total investment fees will be $3 annually per $10,000 in assets. Note: This isn't a fee you have to pay. It will simply be reflected in the fund's performance. But it's so small that the performance of the ETF and the S&P 500 index itself should be virtually identical.

Why buy no matter what?

Here's the reality. Buying the S&P 500 at any point between 1988 and 2023 produced a 11.9% average total return for investors over the next 12 months. Of course, some 12-month periods saw much higher returns while others saw negative performance, but overall, the S&P 500 has been a great wealth builder for long-term investors regardless of when the "buy" button was pushed.

Just to put that into perspective, consider that 11.9% total returns would turn a $1,000 investment into nearly $9,500 after 20 years. Now imagine investing $1,000 every month and letting that compounding magic do the work.

One of the biggest pushbacks I get when suggesting the S&P 500 right now is "Sure, but the S&P 500 is near an all-time high. It can't be a good time to buy."

It's true that we're very close to an all-time high in the S&P 500. But you might be surprised to learn that during the same 1998 to 2023 window, buying the S&P 500 at an all-time high produced a 13.4% average return over the following 12 months. In other words, history shows that a market reaching an all-time high is often a good indicator that it's ready to go even higher.

Of course, past performance is no guarantee of future returns. It's important to emphasize that the stock market doesn't always go up. There's no way to know whether the S&P 500 will be higher or lower in 12 months from now. So, it's generally not a great idea to put any money into this ETF (or into the stock market at all) that you'll need within the next few years. But over the long term, the math is undeniable.

Matt Frankel, CFP® has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

SoFi (NASDAQ:SOFI) reported the best quarter in its history a few weeks ago, and the stock fell by nearly 10%. It has since rebounded, along with many other fintech stocks, but this continues a pattern of SoFi reporting earnings that blew past expectations, only to see its stock retreat afterward.

To be clear, there was a lot to like about SoFi's latest results, but that doesn't mean that the stock fell for no reason. Here's an overview of why SoFi fell after earnings, and why I've been adding shares to my position on any weakness.

Image source: The Motley Fool.

A record quarter by virtually every metric

SoFi's second quarter left little room for disappointment. Just to name a few metrics that reached all-time highs, SoFi's revenue grew by 40% to $1.2 billion, adjusted EBITDA grew 44%, net income of $157 million was the highest it's ever been, and loan originations reached $14.8 billion.

The fintech platform now has 15.8 million members, up 35% over the past year. Brand awareness continues to improve, and SoFi's business has been firing on all cylinders.

What's more, SoFi's cross-buy rate, which is the percentage of products opened by existing customers, has steadily improved from 35% to 51% over the past year. This means that not only is SoFi deepening relationships with its customers, but it is also improving its cost structure, as it's far more efficient to get an existing customer to apply for a loan than to find a new one.

Here's why the stock fell

The main reason SoFi's stock initially fell after earnings was its guidance, which may sound odd, given that it wasn't cut. In fact, management raised its full-year revenue guidance.

However, SoFi's guidance for adjusted EBITDA and EPS was held steady. In other words, higher revenue isn't translating to higher profits. SoFi's CFO explained that the company is spending more on growth initiatives than originally planned.

On one hand, it's easy to see why. The SoFi Plus premium membership product surpassed 200,000 paid subscribers in its first quarter. The cross-buy rate continues to expand, as previously noted. And loan originations are higher than ever. Holding profit expectations steady to fund projects that are delivering results is generally a smart move.

On the other hand, spending more to pursue growth adds uncertainty. Generally speaking, markets dislike uncertainty and will punish a stock (even one whose business is doing well) if it perceives an elevation in what could go wrong. And that's why SoFi's stock got beaten up after a stellar quarter.

The spending is working

SoFi's cross-buy rate, climbing from 35% to 51% over the past year, is clear evidence that its reinvestments are paying off. Members are adding more products within SoFi's ecosystem, and while the bank still has a lot of work to do in this regard, this is important progress toward its ultimate goal of becoming its members' primary bank.

Of course, the market is allowed to be skeptical. We're seeing this in many popular AI stocks that are ramping up capital spending to meet demand. There's always a chance that the spending won't produce the desired ROI. If SoFi's cross-buy growth stalls, or if overall member growth starts to decelerate, the decision to reinvest heavily will look like the wrong one in retrospect.

Having said that, SoFi's leadership team has done an excellent job of growing the top line, improving profitability over time, increasing brand awareness, and deepening engagement with its member base. I'm invested in SoFi for the next 10+ years, not because of what I think the company's profit will be next quarter, which is why I've recently added to my already substantial position.

Matt Frankel, CFP® has positions in SoFi Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ: NVDA) recently reported a quarter in which the company not only more than doubled revenue and beat expectations for both revenue and earnings, but also raised its guidance for the rest of its fiscal year. But there's one metric that has kept the stock from performing as well as some of its peers.

*Stock prices used were the morning prices of Sep. 3, 2026. The video was published on Sep. 5, 2026.

Matt Frankel, CFP® 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.

Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

Warren Buffett avoided technology stocks for most of his career, until he built Apple (NASDAQ:AAPL) into Berkshire Hathaway's (NYSE:BRKA)(NYSE:BRKB) largest holding. Now that Buffett has stepped down, new CEO Greg Abel appears to be forming a second major tech holding. According to Berkshire's latest SEC filings, Google parent company Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG) is now the fourth-largest position in the portfolio, with a stake worth more than $28 billion.

To be sure, we don't know exactly why Greg Abel has been building the Alphabet position, although we know Buffett played an active role in the decision. But here's what investors need to know, and some of the qualities Alphabet has that Buffett loves to see.

Image source: Getty Images.

Why did Berkshire buy Alphabet?

As mentioned, Berkshire's leadership hasn't provided the exact reasons for its decision to buy Alphabet. We do know that the position was initiated in Berkshire's portfolio by Warren Buffett himself in late 2025, who said he regretted not buying the Google parent earlier. The more recent buys were Greg Abel's decision, and he hasn't commented publicly about his reasons for the large investments. However, there's a lot about the mega-cap tech giant that fits Berkshire's investment style. https://www.cnbc.com/2026/07/15/warren-buffett-tells-cnbc-he-initiated-berkshire-hathaways-investment-in-alphabet.html

One is cash flow. Alphabet comprises two highly profitable main business segments. Google Services includes the Search business, as well as YouTube, Chrome, Android, Google Maps, Gmail, and most of the other public-facing Google components. Google Cloud is a cloud services platform, and although it's the third-largest player in an essentially three-horse race, it has been gaining share on its competitors, and its revenue has been accelerating sharply in recent quarters.

Another is market leadership. Google Search accounts for about 90% of global search volume. Android is the leading mobile device operating system worldwide. And who doesn't have a Gmail address? As mentioned, Cloud isn't the market leader, but given its impressive growth trajectory, it wouldn't be a shock if it eventually became the leader. After all, Google Cloud revenue grew 82% year-over-year in the second quarter, compared to 37% growth for Amazon's (NASDAQ:AMZN) AWS and 43% growth for Microsoft's (NASDAQ:MSFT) Azure, which are numbers one and two, respectively.

Finally, Alphabet's management has a strong track record of smart, disciplined capital allocation and is willing to pivot to capitalize on opportunities. The company spent more than $200 billion on buybacks over the past four full years, mostly when the stock was significantly cheaper than it is now, and then decided to stop buybacks entirely and pivot to AI infrastructure investment.

Alphabet plans to spend about $200 billion on the AI build-out this year, and given that Google Cloud's year-over-year growth rates over the past four quarters have been 34%, 48%, 63%, and 82%, and the business now has a backlog of over $500 billion, it's tough to argue with management's decision. In fact, $10 billion of Berkshire's investment was made directly from Alphabet when it decided to raise equity capital in June to help fund its AI growth plans.

Will Alphabet become Berkshire's next Apple?

Berkshire has been building out its Alphabet stake over the past few quarters, and while we don't know Abel's future plans, it's worth noting that Berkshire's latest 13-F covered only purchases made before the end of the second quarter (June 30). Berkshire could have potentially bought more Alphabet shares in the two months since.

It wouldn't surprise me at all if Berkshire's Alphabet stake grew significantly larger from here. The stock trades at about 26 times forward earnings, a very reasonable valuation given that its revenue grew by 24% in the most recent quarter.

Matt Frankel, CFP® has positions in Amazon and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool has a disclosure policy.

The AI trade has been quite a rollercoaster ride in 2026. Chipmakers, AI infrastructure companies, and other key players in the AI build-out have soared, repriced, and in some cases, soared again. In other cases, some stocks have been beaten down and haven't quite recovered.

I've been buying two AI stocks in particular, both of which trade for less than they did at the start of 2026. And the reasons they've been beaten down have little to do with their businesses' future potential. Here are the stocks, and why I've been aggressively buying shares of both over the past few months.

Image source: Getty Images.

The balance sheet everybody is watching

The first stock is Oracle (NYSE:ORCL), which has been absolutely crushing it, business-wise. In the most recent quarter, Oracle's contracted backlog hit an all-time high of $638 billion, with a massive deal with OpenAI, among several other big tech players.

There are two reasons Oracle has been beaten down despite arguably the most impressive new customer wins in the entire technology sector. First, investors are skeptical that customers (especially OpenAI) will be able to fulfill their commitments. Including Oracle, OpenAI has committed to spending $750 billion on computing power and infrastructure through 2030.

Second, Oracle is ramping up its capital spending in order to increase capacity. In fiscal 2026, Oracle's capital spending hit $55.7 billion, compared with $21.2 billion in the previous year. It funded it with about $43 billion in new debt and $5 billion in stock sales (dilution), and it's fair to assume that additional financing will be needed.

The bottom line is that if the expected revenue shows up, Oracle's capex is well worth the cost. If its backlog and realized revenue start to show signs of working out, the stock could be a steal at roughly 18 times forward earnings.

One bad day

IBM (NYSE:IBM) suffered its worst single-day plunge since 1968 in June after it pre-announced a second-quarter earnings miss and CEO Arvind Krishna conceded that the results were far worse than expected. He attributed some of the problems to the global memory shortage, but this also underscores where spending on IBM's services sits on some customers' priority lists.

Despite the disappointing second quarter, there's a lot that is going right for IBM. Its software and consulting businesses (which many consider "legacy") both grew year over year. The company's AI book of business continues to grow rapidly, and IBM recently achieved an important milestone in quantum computing. To be clear, I'm investing in IBM because of a long-term thesis, and the company's early leadership in quantum is a big part of it.

I won't sugar-coat it. IBM's second-quarter numbers were ugly. But it didn't justify a 25% haircut in the stock. The AI tailwinds that have driven sharp growth in bookings in recent quarters remain; it's just that customers' spending priorities have understandably (but temporarily) shifted toward memory chips, servers, and other hardware. Like Oracle, IBM trades for about 18 times forward earnings, and if its issues turn out to indeed be temporary, this could be a great opportunity.

It's also worth noting that both of these are reliable dividend stocks. Oracle has a 1.4% yield at the current price and has raised the payout for 12 consecutive years. IBM yields nearly 3% and has an impressive 31-year streak of increases.

The bottom line is that both of these companies have incredible long-term potential. They're just facing temporary uncertainty right now, and the market is pricing them accordingly. With plans to hold them both for years to come, I've been building positions in these tech giants in my own portfolio.

Matt Frankel, CFP® has positions in International Business Machines and Oracle. The Motley Fool has positions in and recommends International Business Machines and Oracle. The Motley Fool has a disclosure policy.

Zscaler (NASDAQ:ZS) reports its fiscal fourth-quarter results after the market's close tomorrow, Sept. 3. While several cybersecurity stocks are near all-time highs, Zscaler has been out of favor recently, as management gave cautious guidance in its previous earnings report.

However, with two of the largest cybersecurity companies, CrowdStrike (NASDAQ: CRWD) and Palo Alto Networks (NASDAQ: PANW), recently reporting results that show AI is boosting cybersecurity demand, could Zscaler beat the modest expectations investors have for its business?

Image source: The Motley Fool.

As we've seen numerous times this earnings season, beating top- and bottom-line expectations isn't always enough. With that in mind, here are some of the things I'll be watching tomorrow when the company reports.

3 Things I'll be watching

First of all, Zscaler doesn't exactly have a high bar to clear. Management's previous guidance calls for roughly 22% year-over-year revenue growth in the fiscal fourth quarter, and the company has a strong recent history of outperforming its own expectations. In the fiscal third quarter, Zscaler reported 25% growth in both revenue and ARR, as well as its highest-ever adjusted operating margin. But while I'll be watching this, it isn't my main focus.

In the company's fiscal third-quarter report, the problem wasn't Zscaler's top and bottom line. That isn't why the stock fell sharply after the report. It was the guidance. The company's initial fiscal 2027 outlook called for annual recurring revenue growth to slow to just 16%-17%. With CrowdStrike just reporting its highest net new ARR growth rate ever, a significant guidance raise from Zscaler could be a major catalyst for the stock.

After all, a big reason CrowdStrike is trading near all-time highs is that management issued fiscal 2027 guidance calling for net new ARR growth of 630 basis points (6.3 percentage points) above the previous level.

I'll also be watching the RPO (remaining performance obligation), which essentially tells us Zscaler's revenue backlog. This grew 30% in the fiscal third quarter to $6.5 billion, and if the company continues to book revenue faster than its top-line reflects, it could indicate healthy growth acceleration in the near future.

It's all about the outlook

As we've seen with several other AI-focused businesses in this earnings season, simply beating expectations isn't enough. As I'm writing this, Palo Alto's stock is falling despite topping estimates. The biggest factor is what management says about the future. If the company confirms a deceleration in growth, even a strong top-line beat might not matter. On the other hand, strong guidance would likely make investors far more confident heading into the new fiscal year.

The acceleration of agentic AI and the threats that come with it have forced enterprises to bump up spending on cyber defenses. Zscaler's two largest peers just issued earnings reports that clearly show this. The company is well-positioned, with its zero-trust architecture, to lead the way in securing agentic workflows. If the numbers it reports tomorrow, along with its forward guidance and management commentary, indicate that the company is gaining traction in the agentic AI cybersecurity push, the stock could react very positively.

Matt Frankel, CFP® has positions in Zscaler. The Motley Fool has positions in and recommends CrowdStrike and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) has historically been one of the largest shareholders of U.S. banks, and that's still true today. The conglomerate maintains large stakes in Bank of America (NYSE:BAC) and American Express (NYSE:AXP), while also holding several smaller positions in the financial sector.

New CEO Greg Abel and his team might be souring on the banking industry, or at least might see good reasons to reduce exposure to it. In the most recent quarter, Berkshire sold shares of three bank stocks, while simultaneously pouring billions of dollars into the technology sector.

Image source: Getty Images.

There's more to the story, however. Here's a rundown of Berkshire's three bank reductions, and what investors should keep in mind.

The 3 bank stocks Berkshire sold

Berkshire Hathaway was a net buyer of stocks in the second quarter for the first time in several years. But that's not the case when it comes to the financial sector. As mentioned, Berkshire reduced its stakes in three bank stock positions:

• Capital One (NYSE:COF) was reduced by 58%, the sharpest percentage decline. Berkshire now owns about $646 million of Capital One stock, representing about a 0.5% stake in the company.
• Bank of America (NYSE:BAC) was reduced by $1.7 billion, as Berkshire sold 30.2 million shares. It now owns 483.4 million shares, and Bank of America remains one of the largest holdings in the portfolio.
• Ally Bank (NYSE:ALLY) was the smallest of the three sales, with Berkshire reducing its stake by 7%. Berkshire now owns 8.9% of Ally, a stake valued at about $1.14 billion.

Let's put this in some context. Capital One experienced a significant reduction in its position. Berkshire sold about $750 million in the bank's stock (we don't know the exact selling price). Bank of America was the largest sale by dollar amount, and Berkshire has been gradually selling shares over the past few quarters, but it remains a massive part of Berkshire's portfolio. Even after the sale, Berkshire owns nearly 7% of Bank of America, a stake worth more than $30 billion.

Finally, don't read too much into the Ally sale. After the reduction, Berkshire owns about 9% of Ally and, for regulatory reasons, aims to keep this stake below 10%. So, this could simply be a sale to ensure that Ally buybacks wouldn't push it above the threshold.

Why did Berkshire sell bank stocks?

To be sure, we don't know exactly why Berkshire sold. Leadership generally doesn't discuss the specific motivation behind individual transactions. There could be concerns about consumer credit deteriorating, which could explain the sharp reduction in credit card-focused Capital One, in particular.

Berkshire could also potentially be worried about interest rate risk. Rising interest rates are good for banks in some ways, but banks that typically offer minuscule deposit rates (like Bank of America) could have a tougher time competing in a "higher for longer" environment without raising deposit rates, which would cut into margins.

Another explanation could be valuation or position sizing. Between American Express and Bank of America alone, the portfolio is rather concentrated in the financial sector. The sector has performed extremely well in 2026, and this could be a bit of profit-taking in names that have made Berkshire quite a bit of money.

The bottom line is that we don't know for sure. And just because Berkshire sold shares of these stocks doesn't necessarily mean that you should do the same. Full disclosure: Bank of America is one of my largest investments, and I'm not selling a single share because Berkshire did. But it is causing me to take a step back and keep a closer eye on the health of the U.S. consumer to watch for cracks forming.

Bank of America is an advertising partner of Motley Fool Money. Ally is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Matt Frankel, CFP® has positions in American Express, Bank of America, and Berkshire Hathaway. The Motley Fool has positions in and recommends American Express and Berkshire Hathaway. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.

Small-cap stocks had their best first half in 35 years in 2026, and a big reason is that interest rate policy has cooperated. We'll get into the details in a bit, but the series of rate cuts we saw in 2025 gave small caps a valuable tailwind, and the general assumption throughout the first half was that the Fed's next move would be another rate cut.

Fast-forward to the present, and that's no longer the case. In fact, the market is pricing in a 57% chance of a rate hike when the Fed meets in a couple of weeks, according to the CME FedWatch tool. And the base case is now for the federal funds rate to be at least 50 basis points higher in a year than it is now.

Image source: Getty Images.

Of course, there's a lot that can happen over the next year, and projections can be (and have been) wrong. But one ETF in my portfolio I'm watching very closely now is the Vanguard Small-Cap Value ETF (NYSEMKT:VBR).

What is the Vanguard Small-Cap Value ETF?

As the name suggests, the Vanguard Small-Cap Value ETF is an index fund that invests in smaller stocks that have value characteristics. Without getting too deep into the weeds here, most stocks are classified into one of two categories: value or growth. Value stocks tend to be more mature, stable businesses with reliable cash flow (though this isn't always the case).

The fund owns 838 small-cap stocks altogether as of the latest information, with a median market cap of $10.6 billion. As you might expect from a value stock fund, you'll find a lot of companies from the industrial, financial, and consumer discretionary sectors, with less exposure to things like technology and healthcare.

The average stock owned by the Vanguard Small-Cap Value ETF trades for 2.0 times book value and has a price-to-earnings (P/E) ratio of 17. For context, the average S&P 500 stock trades for 5.2 times book and about 25 times earnings.

Why rising rates could be a problem

Here's why the Vanguard Small-Cap Value ETF has been such a beneficiary of rate cuts, and why it could quickly reverse course if we get a rate hike.

In a nutshell, smaller companies borrow differently from large ones. They rely more on bank credit lines and term loans and less on long-dated fixed-rate bonds that larger companies often issue.

The big takeaway is that credit lines and term loans often have floating interest rates. When the Fed raises rates, the cost of carrying debt immediately gets higher. Roughly 40% of companies in the Russell 2000 small-cap index carry floating-rate debt, and as a general rule, value stocks tend to be more debt-reliant than growth stocks.

Of course, there are many moving parts in an index fund with more than 800 stocks, and not all would suffer equally if interest rates rose. For example, bank stocks and insurance companies often earn more when rates rise. But overall, rising rates are likely to be a more negative factor for the Vanguard Small-Cap Value ETF than for an S&P 500 index fund, or even a broader small-cap ETF like a Russell 2000 index fund.

Small-cap value as a long-term investment

To be clear, I've accumulated a position in the Vanguard Small-Cap Value ETF over the past couple of years because I intend to hold it for decades. Small-cap stocks as a whole have traded at a steep valuation discount relative to large-caps for a long time, and growth has outperformed value in recent years.

Over the long-term, small-caps have historically delivered strong returns, and that's why I'm investing. Not because of what I think interest rates or any individual sector will do over the next few months, or even over the next few years. But it's important to be prepared for volatility if the Fed raises rates, and to understand what's causing it.

Matt Frankel, CFP® has positions in Vanguard Morningstar Small-Cap Value ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) bought back $4.5 billion of its own stock in the second quarter, its most aggressive pace of buybacks in several years. Unlike many other companies that buy back stock, Berkshire can do so only when CEO Greg Abel and Chairman Warren Buffett agree that the stock is trading below its intrinsic value.

Are they right? Is Berkshire truly a cheap stock right now?

Of course, it's tough to do a full piece-by-piece analysis in a short article, but we can use the three main parts of Berkshire Hathaway's business to help determine if the stock is cheap or expensive.

Image source: Getty Images.

Berkshire: A sum of three parts

As of this writing, Berkshire's market cap is about $1.09 trillion. If the sum of the parts is worth more than that, it's trading for less than its intrinsic value.

Thankfully, two of the three parts of the business are easy to value. At the end of the second quarter, Berkshire had $365.5 billion in cash and Treasuries on its balance sheet. And as I'm writing this, Berkshire's stock portfolio is worth about $360.5 billion. Subtracting these two numbers shows that Berkshire's operating businesses are being valued at about $364 billion.

Over the past four quarters, Berkshire has produced just over $48 billion in operating earnings. After subtracting investment income from the insurance business (which is mostly the interest earned on its cash), Berkshire's operating income was $35.8 billion.

This means that Berkshire's operating businesses are trading for about 10.2 times trailing earnings. That's a very low multiple. For context, the average stock in the S&P 500 trades for about 28 times earnings. The average energy company (a big part of Berkshire's business) trades for a mid-teen multiple, and the average railroad stock (Berkshire owns BNSF) trades for about 22 times earnings, just to name a few components.

Is Berkshire a cheap stock?

Of course, there are many moving parts to consider, and not every sign points to a high valuation. For example, insurance companies are generally trading for a low double-digit earnings multiple right now, and Berkshire's GEICO has been underperforming its peers in recent years.

Having said that, there's a solid case to be made that Berkshire's intrinsic value is significantly higher than its current market value. Exactly how much higher is a tougher question to answer. If you were to ask 10 experienced stock analysts to calculate the intrinsic value of Berkshire's stock, you'd probably get 10 different answers. However, it's easy to see why Abel might have decided to step on the gas when it comes to buybacks, given the low value the market is assigning to its operating businesses.

Matt Frankel, CFP® has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

I've been a stock investor for more than 20 years, and have owned dozens of technology stocks throughout that time. But I've never owned a pure-play cybersecurity company before.

That changed recently when I opened a position in Zscaler (NASDAQ: ZS) a couple of weeks ago. The stock fell sharply over the past year on AI disruption concerns, and even after a rebound, it sits around 45% below its 52-week high.

To put it mildly, I think the market has this one wrong. Here's why.

Image source: Getty Images.

Zscaler: The 30-second version

If you aren't familiar with what Zscaler does, it operates a "zero trust" platform that helps companies secure access to apps and data. All traffic from remote workers, cloud-based apps, or internal systems is funneled through Zscaler's cloud, which inspects it to ensure access is allowed. Think of it as a checkpoint that employees must pass through to access what they need.

One common misconception is that Zscaler competes with fellow cloud-based cybersecurity company CrowdStrike (NASDAQ: CRWD). But CrowdStrike solves a different problem. It monitors activity on PCs, servers, and cloud-based apps to detect and shut down malicious activity. In simple terms, Zscaler secures network traffic, while CrowdStrike secures devices. Plenty of companies run both.

Why the market has Zscaler wrong

Widespread adoption of AI expands the potential for cyberattacks in a few ways, some of which could be massive tailwinds for Zscaler.

Consider this. Bots, AI agents, and other non-human sources recently surpassed 50% of all internet traffic for the first time. But some industry experts believe this could be just the beginning. Cloudflare's (NYSE: NET) CEO recently said that non-human traffic could be 1,000 times greater than human traffic within five years.

Every AI agent, service account, and API integration is a new identity that can be compromised. If agentic AI traffic grows exponentially over the next few years, Zscaler (which gets paid based on traffic and users flowing through its cloud) could be a massive beneficiary.

In the most recent quarter, Zscaler's annual recurring revenue grew 25% year-over-year, but with agentic AI traffic ramping up, this could accelerate further. The business has strong margins (16% free cash flow margin), and management has done a great job of building out AI tools and making bolt-on acquisitions to prepare for the opportunity.

Of course, there are significant risk factors. Zscaler has significant competition from companies including Palo Alto Networks (NASDAQ: PANW) and Microsoft (NASDAQ: MSFT). And, at 42 times forward earnings, it isn't exactly a cheap stock. But Zscaler sits directly between applications and users, which is a solid place to be as thousands of new non-human users begin to access the enterprise's systems.

Matt Frankel, CFP® has positions in Zscaler. The Motley Fool has positions in and recommends Cloudflare, CrowdStrike, Microsoft, and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) bought back $4.5 billion in stock in the second quarter, its first major buyback activity since early 2024. While other companies buy back billions of dollars in stock, Berkshire's buyback program is a unique one.

Specifically, Berkshire buys back stock only when its leaders believe it trades at a considerable discount to intrinsic value. This lets investors use Berkshire's buyback as a signal that the stock might be cheap.

Image source: Getty Images.

Berkshire's $4.5 billion buyback

Of course, there's more to the story. For one thing, Berkshire started the second quarter with a record high $397.4 billion in cash and Treasuries, and new CEO Abel has been eager to find ways to put it to work.

Also, the second quarter's buyback could be an especially strong signal that Abel believes the stock is cheap right now. Not only is $4.5 billion the most Berkshire Hathaway has spent on buybacks in a single quarter since 2021, but Berkshire's buybacks in recent years have generally occurred while Berkshire was a net seller of stocks.

In contrast, the second quarter saw Berkshire aggressively buy back shares while also investing heavily in other stocks. It wasn't just Berkshire's default use of cash when it couldn't find anything else attractive to buy. Greg Abel clearly sees investment opportunities and believes Berkshire's stock is cheap.

It's also important to put the buyback into perspective. Buying back $4.5 billion worth of shares means that Berkshire repurchased less than one-half of one percent of its outstanding shares. Annualized, this represents a rate of about 1.8% of shares. It's on the aggressive end of the spectrum for Berkshire, but it isn't exactly a table-pounding declaration that the stock is cheap.

The bottom line

Berkshire's buyback clearly indicates that Greg Abel and Warren Buffett (who still plays an active role as Chairman) believe the stock is undervalued. Of course, management can be wrong, and Buffett will be the first to admit that he's been wrong many times throughout his career.

Having said that, it's important to do your own homework. It's never a great idea to buy any stock just because a company is ramping up buybacks. But if you can make the case that Berkshire is worth more than its current market cap of about $1.09 trillion, which means that you agree with Abel and Buffett that the stock is undervalued, now could be a good time to take a closer look.

Matt Frankel, CFP® has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

New Federal Reserve Chair Kevin Warsh gave the first Jackson Hole Economic Policy Symposium speech of his tenure. While he certainly said a lot, the most important thing is what he didn't say. He provided no forward guidance and no real hint at whether the Fed could hike rates in September.

Inflation is still running significantly hotter than the Fed's 2% target, and many of the voting members of the policy-making Federal Open Markets Committee (FOMC) are leaning toward a rate hike before the end of 2026. With that in mind, here's what Warsh said, what he didn't say, and how it could affect investors.

Image source: Getty Images.

What Warsh left out

Warsh gave his speech on the morning of Friday, Aug. 28, and he didn't offer clear forward guidance on the future direction of interest rates. The Fed has held its benchmark federal funds rate at 3.50%-3.75% since last December, declining to make any changes for five consecutive meetings. Meanwhile, inflation has continued to run hot, thanks to higher energy prices and other factors.

At the most recent meeting in late July, the Fed decided to hold rates steady, but with a 9-3 vote in favor, a few dissenters favored a 25-basis-point rate hike. Several credible reports indicate that even more voting members have moved toward rate hikes, so the market was watching for any signals from Warsh. They didn't get any.

Warsh's silence is a big pivot

Warsh has long been critical of the Fed's reliance on guidance. For example, the FOMC issues its forward outlooks on interest rates, economic data, and more four times a year. Warsh argues that forward-looking measures like this have the side effect of locking the committee into certain positions and encouraging markets to price in future actions that may or may not occur. So, Warsh's silence was very deliberate.

Because of Warsh's silence on rate hikes, September's meeting outcome is a true mystery at this point. According to the CME FedWatch tool, which measures the probability of Federal Reserve rate moves priced into the markets, Investors are pricing in a 43% chance that the Fed holds rates unchanged and a 57% chance that we'll get a quarter-point rate hike. With just over two weeks to go until the meeting, that's about as divided as we've seen in a long time.

The bottom line is that the FOMC decision, which is expected on Sept. 16, has the potential to move the stock market significantly in one direction or the other. While Warsh refused to signal a rate hike, he also didn't do anything to signal that there wouldn't be one. The August CPI inflation data, which will be released prior to the meeting, could move expectations, so that will be worth watching. But Warsh reassured nobody, and that's exactly what he wanted to do.

The Motley Fool has a disclosure policy.

Since 1928, the S&P 500 has produced an average return of negative 1.17% in September. It has fallen in September in 56% of years since then, and September is the only month with a negative long-term return track record.

However, it's worth pointing out that "usually" and "always" are two different things. A decline in September in 56% of all years also means the month is positive 44% of the time. Here's the real data, whether investors should take action, and three important things for investors to do, even if September is a bad month for stocks.

Image source: Getty Images.

September is the worst month. Here's why you shouldn't sell.

The seasonality is real. As mentioned, the average September produces a 1.17% negative total return in the S&P 500, and that's according to Bank of America (NYSE: BAC) data.

Not only that, we're seeing some of the key signs that this September could be a rough one. According to Carson Investment Research, when the S&P 500 gains more than 1% in August and produces five or more record highs, September has been negative even more often.

Having said that, let's put things into perspective. The S&P 500 has returned an average of 13.4% over the 12 months following a record high, from 1988 through 2023. That's compared to an average of 11.9% over all 12-month periods during that time frame.

A 1.17% average decline in September simply isn't worth selling in anticipation of. For one thing, you could get hit with tax bills on any profitable investments that effectively produce far more than a 1.17% decline. And it's simply not worth the risk of timing. As a hypothetical example, the S&P 500 might see a slight decline, as it does in a typical September, or we could get positive news on the Iran war, inflation, and/or tariff uncertainty, and the S&P 500 could soar by 10%. That might sound like a stretch, but it certainly could happen.

What you should do instead

While it's not a great idea to sell stocks and ETFs just because September is historically the worst month for stocks, there are some things that are smart to do:

• Keep your automatic contributions going into your investment account. This will give you dry powder to deploy at favorable prices if the market does have a rough September.
• Have a list ready of the stocks you would buy if they fell by 10% in September.
• Check whether your portfolio needs rebalancing, whether any positions have outperformed, or whether your overall stock and bond allocation has drifted out of alignment.

The bottom line is that September could indeed be a rough month for the stock market. But there's a lot that could go right as well. The best move is to ignore the noise and stay the course.

Bank of America is an advertising partner of Motley Fool Money. Matt Frankel, CFP® has positions in Bank of America. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

In the second quarter, Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) was a net buyer of stocks for the first time in several years. Although the large investment in Google parent Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) received the most headlines, there were several other investments Berkshire made that shared a common theme: housing.

To be clear, Berkshire Hathaway CEO Greg Abel hasn't specifically said that he's anticipating a housing recovery. But all the signs point to Berkshire betting big that the near-stagnant housing market in the United States will turn around.

Image source: Getty Images.

Three big housing moves

Over the past few months, Berkshire Hathaway has acquired a homebuilder outright and has invested in the stock of two others. Specifically:

• Berkshire acquired homebuilder Taylor Morrison for $8.5 billion. The deal closed during the second quarter, adding a top-10 homebuilder to Berkshire's list of subsidiaries.
• Berkshire increased its existing investment in Lennar (NYSE: LEN) by about 30% during the second quarter.
• Although it's a small position, Berkshire bought shares of D.R. Horton (NYSE: DHI) during the second quarter. We'll have to wait and see if this is simply a starter position Berkshire plans to build over time.

It's also worth noting that these moves are in addition to Berkshire's existing housing exposure. It already owns the leading manufactured homebuilder, Clayton Homes, and there's a solid valuation case that Clayton could be worth up to $25 billion on its own. Berkshire also owns Berkshire Hathaway Home Services, one of the largest real estate brokerages in the United States.

Is the frozen housing market about to thaw?

As Home Depot's (NYSE: HD) CEO recently put it, the real estate market in the United States is "frozen." High mortgage rates, sharply rising home values over the past several years, and widespread economic uncertainty have caused the housing market to slow to a crawl.

However, there's a solid argument that tremendous pent-up demand could emerge as soon as interest rates trend lower. There's a massive housing shortage in the U.S., with most estimates determining that we need over 1 million new homes to accommodate everyone. The U.S. has generally underbuilt new homes each year since 2008, and household formation has continued to progress. Plus, there are many would-be homebuyers and sellers who simply feel stuck in place with pandemic-era 3% mortgage rates.

Of course, nobody knows when rates might start to fall, and the housing market will get a little more robust. But most homebuilders are trading at rock-bottom P/E valuations, and a bet on them now could certainly pay off handsomely if Abel is right.

Matt Frankel, CFP® has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, D.R. Horton, Home Depot, and Lennar. The Motley Fool has a disclosure policy.

Both Anthropic and OpenAI filed confidential S-1s in June, indicating that they're planning IPOs in the not-too-distant future. OpenAI's CFO recently indicated that its IPO won't take place until 2027, as the company raised $122 billion in fresh capital earlier this year and isn't in any hurry.

On the other hand, Anthropic, the company behind the Claude AI tools, is reportedly targeting a public debut later this year, and at an eye-popping valuation. In fact, if the reports are accurate, Anthropic could surpass SpaceX as the largest IPO of all time.

Image source: Getty Images.

Anthropic's IPO: What we know, and what we don't

When a company files confidentially to go public, there's a lot of information we don't know. For example, we won't see audited, detailed financials until the actual S-1 is filed. And we don't know for sure when Anthropic plans to complete its IPO or the valuation it is targeting. All we have are third-party reports.

We also don't know whether Anthropic is profitable (likely not) or when it expects to become profitable. The company has hundreds of billions of dollars in compute obligations already, and is investing aggressively to build out its capabilities.

What we do know is that Anthropic's growth has been exponential. The company had a $47 billion annualized revenue run rate in mid-May, and by the end of July, this had risen to $65 billion. Insiders expect to reach a run rate of $100 billion to $120 billion by the end of the year.

We also know that Anthropic raised $65 billion in a May funding round, at a $965 billion valuation. That's a sharp increase from the $380 billion valuation it received in February.

A record-breaking IPO?

According to reports, insiders are targeting an IPO in October (or shortly thereafter) at a valuation exceeding $2 trillion. This would break the record for valuation at the time of an IPO, surpassing the $1.77 trillion valuation of SpaceX (NASDAQ: SPCX) when it went public a few months ago.

My bold prediction for Anthropic's IPO has two parts. First, I think it will go public at a valuation significantly higher than $2 trillion, especially if it is approaching a $100 billion revenue run rate by that time. A valuation of 20 times sales is far less than where SpaceX stood at the time of its IPO, and I'd argue that Anthropic's growth is more impressive.

Second, I predict that not only will Anthropic's IPO break the valuation record, but that it will also break the record for the amount raised. The demand is there. After all, OpenAI raised $122 billion earlier this year, and that was from private equity, with far less revenue and slower growth than Anthropic is bringing to the table.

So, here's my full (admittedly bold) prediction: Anthropic will go public at a valuation of $2.2 trillion or more, and will raise at least $150 billion in its IPO, shattering SpaceX's record.

Matt Frankel, CFP® 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.

As of this writing, the S&P 500 has closed at an all-time high 27 times so far in 2026. The benchmark index has risen by about 13% year-to-date. Because of this, many investors are wondering if the market is ripe for a pullback.

It's certainly understandable to think that a decline is inevitable. But it might surprise you to learn that history suggests that the exact opposite is likely to be the case. In simple terms, record highs in the stock market are a lot more common (and less dangerous) than you might think.

With that in mind, here's what tends to happen after the stock market reaches record highs, backed by decades of real data.

Image source: Getty Images.

What happens after a record close?

First, there's no such thing as a "normal" year in the stock market, and nobody has a crystal ball that can tell you what the S&P 500 will do over any time period in the future. It's entirely possible for the S&P 500 to gain 20% over the next year, and it's also possible for it to decline by the same amount. And neither would be a statistically unusual year.

With that in mind, here's what the data tells us. Between January 1988 and December 2023, the S&P 500 gained an average of 11.9% over any random 12-month period. But if you look at a 12-month period immediately following a record close, the S&P 500 gained an average of 13.4%. In other words, it has historically been better to buy after a record close than to buy stocks on the average day.

Here's why. A market making new highs is usually a market where earnings are growing. It's usually a market with sustained upward momentum. As mentioned, every period is different, but a record close can be more of a catalyst for future gains than it might seem.

What should you do?

If you have cash on the sidelines and you're specifically waiting for the market to decline before you put it to work, it could be a smart idea to rethink that strategy. I'm a big fan of buying at regular intervals, regardless of what the market is doing. It takes the emotion out of it.

Of course, there are some serious risk factors in the market right now, such as the conflict in Iran, the 30-year Treasury yield near a multi-decade high, and the possibility that the Federal Reserve could hike interest rates. There's no guarantee whatsoever that the market will match its historic post-record performance. But the point is, it doesn't need a correction anytime soon, either.

The Motley Fool has a disclosure policy.

Now that the SpaceX (NASDAQ: SPCX) IPO is firmly in the rearview mirror, AI giants OpenAI and Anthropic are the most anticipated still-to-come public debuts. But at least in one case, it appears investors will have to wait a little longer.

OpenAI's chief financial officer, Sarah Friar, recently told the company's staff that it "will be a public company in 2027." This follows a reported internal dispute between CEO Sam Altman, who wanted to go public later this year with a $1 trillion valuation, and Friar, who hasn't been in a hurry.

Here's why waiting to go public may have been the right call, and what investors need to know.

Image source: Getty Images.

Why timing matters

Friar has argued that OpenAI's business wasn't ready for public scrutiny. If you aren't familiar, an IPO requires a company to publish audited financials and details about its business. If a company isn't quite ready for that level of scrutiny, it could have trouble raising the desired level of interest to carry an IPO.

There's a solid argument to be made that OpenAI could benefit from waiting. The company generated $6.7 billion in revenue in the second quarter, up 18% from the first quarter. It had a $40 billion annualized revenue run rate at mid-year, and completed a funding round in March at an $852 billion valuation.

On the other hand, rival Anthropic reached a $65 billion run rate at the same point, has grown at a significantly faster pace in recent quarters, and filed its confidential S-1 before OpenAI. Friar told staff that she isn't worried about beating Anthropic to the public markets, and management may hope to narrow the revenue gap before taking the next steps.

Finally, and perhaps the strongest argument for waiting, OpenAI's March investment round brought in $122 billion in fresh capital. This means that OpenAI doesn't need to rush to the public markets. The company will certainly need more money to fulfill its commitments and scale out its compute capacity, but this gives it plenty of runway.

The bottom line

The bottom line is that a large, fast-growing business's flexibility in choosing its IPO timing is a position of strength. Friar and the company's management team are waiting until the time is right, and that's not a bad thing.

Now, although I think waiting to go public looks like the right move, that doesn't necessarily mean that OpenAI will be a buy once it finally lists on a major exchange. We'll have to wait and see the financials before determining that.

Matt Frankel, CFP® 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) has become the most dominant and profitable company in AI infrastructure, and it's not even close. It's also been one of the worst-performing chip stocks so far in 2026, despite posting incredible business results. While the PHLX Semiconductor Index has gained more than 60% so far this year, Nvidia is up by roughly 12% year-to-date as of this writing.

That's a big performance gap. Let's take a step back to look at why Nvidia has been such an underperformer in 2026, the important valuation metrics to know, and whether Nvidia is a cheap stock -- or cheap for a reason.

Image source: Getty Images.

What's with the underperformance?

As mentioned, Nvidia has dramatically lagged the overall semiconductor industry so far in 2026 in terms of stock performance.

There are a few basic reasons. First, the numbers have simply become very large, and the market seems to be pricing in an eventual slowdown. Nvidia's trailing 12-month revenue is more than $250 billion, and is nearly double what it was a year ago. At the current growth rate, this would reach about $500 billion a year from now and $1 trillion a year after that. The market doesn't seem convinced the current pace of growth can last much longer.

Second, the market is no longer surprised by Nvidia's results. It has beaten expectations quarter after quarter in recent history. Nvidia's two previous earnings reports this year were spectacular, but the market didn't really care.

Finally, Nvidia's competitive threats are intensifying. Not only from AMD (NASDAQ: AMD), which is emerging as a serious contender in the AI data center chip space, but from custom accelerators developed by the hyperscalers themselves.

A $5 trillion cheap stock?

On the surface, Nvidia looks cheap, at least compared to other AI stocks. It trades for about 25 times forward earnings, and this is for a business with a 74% gross margin and an 85% year-over-year revenue growth rate in the most recent quarter. Plus, the company has reported an order book worth about $1 trillion across 2026 and 2027.

Nvidia reports its fiscal third-quarter earnings later this week, and there are a few things to watch in addition to the headline revenue and earnings growth numbers. Any management commentary on hyperscaler order flow is worth noting, and it's important to keep a close eye on Nvidia's gross margins, especially with so much new competition in the market.

The bottom line is that Nvidia is an attractively valued AI stock right now, especially given its growth trajectory. But there are serious questions about how long the current growth momentum can be sustained, and whether competitive pressures will start to affect Nvidia's pricing power going forward.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.

SoFi (NASDAQ: SOFI) just reported its second-quarter earnings, and the numbers look generally strong. In fact, the company posted all-time records for member growth, revenue, and several other key metrics.

Despite the solid earnings report, SoFi's stock fell by about 10% in reaction to the report. Here's a look at some of the most important numbers from the second quarter, and why the stock may be falling despite the strong results.

Image source: SoFi.

A record-setting quarter

On the top line, SoFi reported $1.2 billion in net revenue, up 43% year-over-year and well ahead of analyst estimates. Earnings per share came in at $0.12, also significantly above estimates.

Adjusted EBITDA grew by 44% to an all-time high and represented the 19^th consecutive "rule of 40" quarter for the company, showing that the company's track record of profitable growth is still intact.

During the second quarter, SoFi added 1.1 million members (the highest single-quarter total yet), and now has 15.8 million people in its ecosystem. More importantly, SoFi's cross-buying success is accelerating. 51% of all new products were opened by current customers, up from 43% in the first quarter and 35% a year ago.

Additionally, SoFi's loan originations reached an all-time high of $14.8 billion, with solid growth across personal, student, and home loans. Despite the growth, credit quality improved, with SoFi's annualized personal loan charge-off rate down 21 basis points year over year.

Why is SoFi's stock down?

As far as the second quarter results go, there isn't much to dislike. But one potential reason for the negative reaction is concern about SoFi's profitability. On one hand, management raised revenue guidance for the full year. But on the other hand, guidance for adjusted EBITDA and earnings per share was held constant. In other words, shouldn't more revenue mean more profit as well?

In a CNBC interview following the earnings announcement, SoFi's CEO, Anthony Noto, said that the bank's expectations have shifted to two rate hikes this year (compared with two rate cuts at the beginning of the year), which has made the company hesitant to raise EPS guidance.

After today's decline, SoFi stock trades at its lowest price-to-book valuation in more than a year and at 23 times forward earnings, a rather low multiple given the company's top-line growth rate of more than 40%.

In a nutshell, this was an extremely solid quarter overshadowed by near-term profitability concerns. If you're a believer in the long-term potential of SoFi's business, now could be a smart time to take a closer look.

Matt Frankel, CFP® has positions in SoFi Technologies. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Apple (NASDAQ: AAPL) officially launched its Apple Upgrade leasing program this week, allowing customers to pay monthly for iPhones, Apple Watches, Macs, and iPads. Payments start at $17.99 per month, giving customers the financial flexibility to upgrade their devices more frequently without making lump-sum payments.

To be clear, this could be a big deal for Apple. Leasing payments are significantly lower than the company's old upgrade program, so this could boost sales by encouraging customers to not only upgrade more frequently, but to lease higher-end devices than they would ordinarily buy outright.

Image source: Getty Images.

Leases run 12-24 months for iPhone and Apple Watch products, and 24-36 months for Mac and iPad. Meanwhile, the average traded-in iPhone today is about 3.6 years old, according to Assurant data. This means customers could upgrade their iPhones twice as often as they do today, which could be a major boost to Apple's new device sales.

However, the biggest winner here might not be Apple, but the company running the leasing program.

Apple's leasing partner

Apple's new leasing partner is the buy-now, pay-later (BNPL) financing leader, Klarna (NYSE: KLAR).

Klarna is providing the financial infrastructure for the Apple Upgrade program. It will legally own the leased devices throughout the term, and at the end of the lease, customers can pay a residual fee to keep them, return them, or upgrade to the newest model. Klarna pays Apple for the device upfront and carries the receivable (lease obligation) on its balance sheet.

Klarna makes money from this partnership in two main ways. Apple will pay merchant fees for Klarna providing the financing, just as with any BNPL transaction. The company can also refurbish and resell any devices that get returned at the end of their lease. And these two income streams will be happening at an Apple-level scale.

The bottom line

Klarna isn't exactly a low-volume company as it is, but providing Apple's leasing infrastructure could be a big needle mover. It's tough to overstate the opportunity here. For context, Apple generated more than $200 billion in sales last year from the iPhone alone. Obviously, not all of this volume will move to Klarna's network, but a meaningful percentage of it could. And with two big ways the company could profit from this partnership -- including one that won't show up in the numbers until leases start to mature -- it could be a long-tailed revenue driver for the fintech.

Matt Frankel, CFP® has positions in Klarna Group and has the following options: long January 2027 $15 calls on Klarna Group. The Motley Fool has positions in and recommends Apple and Klarna Group. The Motley Fool has a disclosure policy.

Amazon (NASDAQ: AMZN) is set to report its second-quarter earnings on Thursday, July 30, and expectations are high, especially for the AWS cloud services business. For example, analysts at Bank of America recently raised their AWS growth forecast to 33% year-over-year, specifically calling out demand from Anthropic and OpenAI workloads.

This would be a significant acceleration from the 28% growth rate the commerce and tech giant reported in the first quarter and would likely be taken as a positive sign by investors. But I'm going to make the bold prediction that even these lofty expectations aren't enough -- in fact, I predict that AWS revenue growth could come in at 35% or more.

Image source: Getty Images.

Amazon's second-quarter earnings: What the market expects

As mentioned, Amazon reports earnings on Thursday (after the market's close), and analysts expect about $197 billion in total revenue and $1.82 in earnings per share, which would be 8% higher than a year ago.

When it comes to AWS, expectations vary depending on who you ask, but virtually all analysts expect to see acceleration compared to the first quarter. Most reputable analyst forecasts expect AWS revenue growth in the 31%-33% range.

So, why am I predicting an even better number? For one thing, I agree that the demand from Anthropic and OpenAI is likely to be a big driver of second-quarter growth. And AWS revenue growth has already been accelerating -- in fact, the 28% revenue growth rate AWS posted in the first quarter was the fastest in nearly four years.

The most important number isn't AWS top line growth

Don't get me wrong. If AWS posts a blowout number, it could make or break the market's reaction to Amazon's earnings report. But the AWS growth all by itself isn't the full story -- it's how efficiently Amazon is spending its money to achieve said growth.

In February, Amazon CEO Andy Jassy guided for $200 billion in capex for 2026, most of which will be spent on AI infrastructure. And while Amazon can certainly afford to spend this money, the big question on investors' minds has been whether it will produce an adequate return for the company. In other words, will the growth (and profits) that Amazon produces justify such a large price tag?

To put it mildly, accelerating AWS growth would be a big step in the right direction, showing investors that the juice is worth the squeeze. And if AWS can report better-than-expected growth without an alarming increase in projected capex, it would be even better. But when the earnings report is released, it will be important to pay close attention to AWS's growth and the cost of that growth.

Matt Frankel, CFP® has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, hasn't exactly been a great performer on the public markets, losing more than $1 trillion in market value since its June peak. It went public at $135 per share, but quickly soared to a peak of $225.64 just days later. As of this writing, the stock trades for less than $110.

Despite the slump in the stock price, there isn't much that has gone wrong with the actual business. Here's a quick overview of what has changed for better or worse since SpaceX went public, and what to watch going forward.

What is behind SpaceX's trillion-dollar plunge?

First, the trillion-dollar figure refers to the difference between SpaceX's current market cap and its peak shortly after its initial public offering. Compared with the IPO price, which valued the company at more than $1.7 trillion, SpaceX is down by less than 20%.

Image source: The Motley Fool.

Even so, a nearly 20% decline in less than two months raises the question of what went wrong.

The short answer is "not much." The flagship rocket program, Starship, temporarily delayed its launch, which may have spooked investors. But that's par for the course when it comes to space companies, and the launch successfully took place on July 24.

There's also anticipation that insiders may begin cashing out as lockup periods expire. SpaceX is using a non-traditional lockup expiration schedule, with a significant amount of stock set to become available for trading after it reports second-quarter earnings on Aug. 4.

More good than bad

It's worth pointing out that since SpaceX went public, the news has generally been positive for the business and for overall sentiment. Just to name some of the key developments:

• While the compute deals with Anthropic and Alphabet came before the IPO, SpaceX added a deal with Reflection AI in the weeks that followed, and further potential deals are reportedly in the works.
• As mentioned, the Starship launch took place on July 24 and was a success, with the softest-ever splashdown.
• Most analysts who have initiated coverage on SpaceX have been bullish, with a median analyst price target of about $242 (more than double the current price).

In a nutshell, although the numbers are admittedly huge, the percentage move hasn't been too unusual. Several other recent IPOs that received a lot of attention (such as Figma (NYSE: FIG)) cooled off even more in the weeks after going public. With SpaceX set to report earnings for the first time as a public company on Aug. 4, investors will get a glimpse of how the business is actually performing and a clearer picture of whether the current valuation is cheap or expensive.

Matt Frankel, CFP® 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.

Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) just reported excellent second-quarter results, especially for Google Cloud. The tech giant's cloud revenue soared by 82% year-over-year, making it by far the fastest-growing part of the business.

The other two massive cloud infrastructure providers, Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT), which operate AWS and Azure, respectively, report earnings later this week. And Google Cloud's stellar performance makes it extremely important for its rivals to show impressive results of their own.

Image source: Getty Images.

Google Cloud's incredible momentum

Google Cloud revenue reached $24.8 billion in the second quarter. The 82% year-over-year growth rate was a sequential acceleration from the 63% growth rate reported in the first quarter and the 48% growth rate in the fourth quarter of 2025.

Not only was the top-line growth impressive, but Google Cloud is getting even more profitable. Operating income from the Cloud business reached $8.8 billion -- that's roughly three times what it produced a year ago.

Alphabet raised its capex forecast to $195 billion to $205 billion for the full year, causing the stock to pull back slightly despite generally excellent results. But it's fair to say that the rapid acceleration in Google Cloud's growth shows that the company is (at least for now) seeing a strong return on its aggressive spending.

Why Amazon and Microsoft investors should take notice

Google Cloud has the third-largest cloud services market share, behind Amazon's AWS and Microsoft's Azure. But those two aren't growing at 82% year-over-year, at least not yet.

In the first quarter, industry leader AWS reported 28% year-over-year revenue growth, while Microsoft reported 40% growth in its Azure business. Many analysts expect AWS to show actual growth of slightly more than 30% in the second quarter, with Microsoft's management providing Azure revenue growth guidance in the 39%-40% range.

Both Amazon and Microsoft are also spending hundreds of billions of dollars on capex, primarily to build out data centers and other AI infrastructure. And investors want to see that they're getting a strong return on this spending, as it's not only consuming all of their free cash flow, but is creating a need to spend cash and take on debt.

For that reason, growth of cloud revenue is likely to make-or-break the market's reaction to both of these companies' earnings reports. If Amazon and/or Microsoft can report better-than-expected cloud growth, especially if they do so without raising capex more than expected, it would go a long way toward boosting investor confidence.

Matt Frankel, CFP® has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy.

PayPal (NASDAQ: PYPL) just reported earnings that beat expectations on both the top and bottom lines, at a time when its payments rival, Stripe, is trying to buy the company for $53 billion. Here's what investors need to know about PayPal's latest numbers and what it could mean for any takeover attempt.

PayPal's strong second quarter

As mentioned, PayPal received an offer from Stripe and private equity firm Advent to buy the company for $60.50 per share. The company reportedly views this as inadequate and would expect something closer to $70 to seriously consider a deal.

Image source: Getty Images.

Because of this, it was crucial for PayPal to deliver strong results. And it did.

Although EPS fell by 1% year-over-year, PayPal handily beat expectations, fueled by better-than-expected 5% revenue growth. Beyond the headline numbers, the business results look quite solid:

• Total payment volume reached $486.4 billion, up 10% year-over-year, with Venmo growth especially strong.
• Adjusted free cash flow was more than $1.8 billion, giving PayPal plenty of financial flexibility to keep buying back shares hand-over-fist and invest in its own growth initiatives.
• PayPal raised its full-year guidance for transaction margin and for adjusted EPS. Margins have been a major concern among investors, so this was certainly a nice surprise.

What does it mean for Stripe's offer?

Let's be clear. Even before this earnings report, there was a solid case to be made that PayPal's intrinsic value was significantly higher than $60.50 per share. At that valuation, Stripe was offering to pay about 11 times forward earnings for the fintech giant.

However, after reporting generally excellent results, it has become much easier for management to argue that PayPal is worth far more than $53 billion.

On the company's earnings call, CEO Enrique Lores didn't directly comment on the Stripe and Advent offer, but he said the board would be open to evaluating any offer that would create more shareholder value than executing the company's growth plan. He didn't provide any context on what an attractive offer might look like, but the fact that Lores publicly took a neutral stance on a potential takeover (as opposed to saying something like "we aren't for sale") is a significant development.

To sum it up, PayPal's second-quarter earnings didn't necessarily kill Stripe's takeover efforts. Management made it quite clear that the answer to any takeover offer isn't an automatic "no." But the company's strong results raise the price that PayPal's board can realistically expect from a potential acquirer.

Matt Frankel, CFP® has positions in PayPal and has the following options: long January 2027 $75 calls on PayPal, long January 2027 $95 calls on PayPal, short January 2027 $135 calls on PayPal, and short January 2027 $85 calls on PayPal. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short September 2026 $47.50 calls on PayPal. The Motley Fool has a disclosure policy.

General Motors (NYSE: GM) reported its second-quarter earnings, and the results beat expectations on both the top and bottom lines. In an interview on CNBC, CFO Paul Jacobson called the company's stock a "bargain," even though the share price has risen by more than 40% over the past year.

Is he right? There are certainly some good reasons to believe GM is extremely cheap right now, but there are also a few not-so-positive things to keep in mind. Here's a rundown of GM's second-quarter results, the case for why the stock is an incredible bargain, and the important things to watch going forward.

Image source: Getty Images.

An extremely solid quarter

In the second quarter, GM generated $48 billion in revenue, about a billion dollars more than analysts had expected, and adjusted earnings per share (EPS) beat by a wide margin. Automotive free cash flow of about $5 billion was 78% higher than a year ago. One particularly impressive statistic Jacobson pointed out in the conference call was that "Our first-half earnings per share is 25% higher than the first half at any time in our history."

Plus, the automaker increased its full-year guidance for adjusted EPS, automotive free cash flow, and several other profitability metrics. Adjusted EBIT margin expanded by 2.5 percentage points year-over-year, and GM's margins have notably expanded at the same time its peer group has seen margins fall. The company has a dominant lead in the high-margin full-size pickup market, and the software and services side of the business, which includes products like OnStar and Super Cruise, continues to grow impressively. In addition, GM's insurance business has rapidly scaled from being in just three states in 2024 to 21 states now. And last but certainly not least, GM's defense business has excellent momentum, and management is hopeful this segment will turn profitable this year.

Thanks to its strong cash flow, GM continues to buy back stock at an aggressive pace. In the second quarter alone, the company spent $2 billion to repurchase about 25 million shares. The outstanding share count has declined by 8% over the past year and 35% over the past three years, which could continue to drive EPS higher going forward.

It's not all good news

GM certainly reported a strong quarter, but it wasn't a perfect one. While it beat expectations on adjusted EPS, this excludes a $2.3 billion one-time charge related to scaling back the company's EV strategy. On a GAAP basis, GM's net income actually declined by about 31% year-over-year.

Market share is arguably the biggest concern. A year ago, GM had 17.4% of the U.S. market, which has since declined to 16.6%. To be fair, there were some good reasons, such as the strategic decision to discontinue certain models and the reduction in EV incentives that had disproportionately helped GM. But this is worth keeping an eye on.

Finally, although it came in above expectations, GM's revenue grew by less than 2% year-over-year. It's important for investors to understand that this quarter was about earnings quality, not overall business growth.

Is GM a bargain at a sub-$80 stock price?

In full disclosure, General Motors is one of the largest stock investments in my portfolio, and it's a company I truly believe in as a long-term holding. Over the past decade or so, the company has done a great job of innovation, becoming more efficient, and of allocating capital in shareholder-friendly ways. Having said that, the stock isn't without risk, and it's important to realize this is a cyclical business and not all the numbers look perfect.

Even so, GM trades for a ridiculously cheap valuation of just 6.3 times forward earnings, and there's a lot to like about the company's current trajectory. I'm planning to continue to build my position at these levels, and I'm excited to see what comes next.

Matt Frankel, CFP® has positions in General Motors. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.

I haven't bought too many AI stocks in my portfolio yet, except for a few data center REITs and one major chipmaker. But recently, I pulled the trigger and added shares of Oracle (NYSE: ORCL) to my portfolio after shares declined by more than 60% from their 52-week high.

The short version is that the market has legitimate concerns about Oracle's massive backlog and the debt it is taking on to fulfill its contracted orders. But if the company's strategy works out, the stock could be an incredible bargain at the current share price. Here's a rundown of why Oracle's stock has been beaten down, why I bought, and why I may add even more to my position.

Image source: Getty Images.

Oracle: The good and the bad

The biggest bull case for Oracle is also the same reason many investors are skeptical. The company has a $638 billion remaining performance obligation (RPO), which represents the contracted future revenue its customers have committed to. This is 363% higher than it was a year ago, and as you can probably guess, the surge in AI infrastructure spending is the main reason.

For its 2027 fiscal year, which started June 1, Oracle is guiding for $90 billion in revenue. For reference, in its 2026 fiscal year, the company generated about $67 billion. And keep in mind that the $638 billion figure represents only contracts that have already been signed -- as customer needs grow, this figure could increase.

However, many investors are justifiably skeptical about the massive backlog. And it's fair to say that if we knew Oracle would actually get all $638 billion of that contracted revenue, the stock wouldn't be as beaten down as it is.

For one thing, about half of the backlog comes from a single customer -- AI platform giant OpenAI. That company recently delayed its IPO, which added to major concerns about its ability to meet its obligations. In addition, Oracle is not only spending all of its income to set itself up to fulfill its backlog but is also taking on debt. The company added $43 billion in debt to its balance sheet in the 2026 fiscal year, and expects to raise an additional $40 billion between debt and equity in the current fiscal year.

In short, Oracle's spending plan is frightening investors, and it's not hard to see why. The company is spending billions of real dollars (much of which it doesn't have) in pursuit of promised revenue.

A substantial discount for a wonderful business

After the recent decline, Oracle trades for less than 16 times forward earnings. The stock has a 1.6% dividend yield and has produced a net margin of nearly 27% over the past four quarters. This is a highly profitable business that is sacrificing short-term cash flow to take full advantage of the tailwinds from the AI infrastructure build-out.

Of course, there are some legitimate risks. It's entirely possible that OpenAI won't be able to raise the capital needed to cover all of the spending it has committed to (Oracle isn't the only one with a large, multi-year agreement with the AI giant). We could see a general downturn in AI capex instead of the multi-year spending surge investors are expecting.

I don't view those as particularly likely scenarios. OpenAI hasn't had much of an issue raising money at lofty valuations whenever it has tried to. And all recent signs point toward more infrastructure capex than originally expected in 2027 and beyond, not less.

The key question is whether a significant portion of the backlog will convert into actual revenue before Oracle's spending plan becomes unmanageable. If the answer is yes, Oracle at 16 times forward earnings could be a steal.

The bottom line is that Oracle has been a wonderful business for decades, and for most of its 35-year publicly traded history, it has been a mistake to bet against it. With the stock trading at its lowest price since 2023, before the AI investment boom even kicked into high gear, I decided to open a position in my portfolio. And if it stays this cheap, I plan on adding more shares very soon.

Matt Frankel, CFP® has positions in Oracle. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.

Last week, International Business Machines (NYSE: IBM), better known as IBM, pre-announced its second-quarter revenue and earnings. To put it mildly, it was not well received by investors.

On the day of the earnings pre-announcement, IBM shares fell by 25%. That's its worst single-day performance since Black Monday in 1987.

To be fair, IBM's announcement was certainly bad news from a short-term perspective. But it doesn't dramatically change my long-term thesis with the stock, and I'm planning to use this opportunity to add to my position. Here's exactly what IBM revealed from its second quarter numbers, what we don't know yet, and why I'm buying more shares on the dip.

Image source: Getty Images.

The numbers were ugly

I won't sugar-coat it. IBM's preliminary third-quarter numbers were pretty bad. The company said revenue would come in at $17.2 billion, versus nearly $17.9 billion that analysts had expected. On the bottom line, adjusted EPS of $2.93 also fell short of the $3.02 consensus estimate.

Now. Those numbers were bad, but not enough to warrant a 25% decline on their own. The real story is how CEO Arvind Krishna explained it. He said that in the last couple of weeks of June, IBM's enterprise customers quickly redirected spending toward memory chips, servers, and other hardware in anticipation of price increases and supply constraints. This caused budgets for IBM's software and consulting to drop sharply. IBM's infrastructure, consulting, and software revenue all came in weaker than expected.

On one hand, this frames IBM's products and services as somewhat discretionary. But on the other hand, there's a big difference between falling demand and "customers are delaying their spending with us." Demand didn't vanish -- it simply got reprioritized due to the memory chip shortage.

Krishna said that IBM didn't do a great job in anticipating the shift, and he's right. But IBM's disappointing software and consulting revenue should come back in later quarters as the supply and demand dynamics in memory and other hardware start to come back to equilibrium.

Why I'm buying more

To be sure, there's a lot we don't know. IBM didn't pre-release its entire earnings report, just a few key numbers and an explanation. We don't yet know IBM's bookings, which are indicative of future revenue. Optimism about IBM's stock price has been fueled more by the growing AI business book than by current realized revenue.

After the decline, IBM's stock is trading for about 17 times earnings, and it has a 3.2% dividend yield that is well-covered by the company's cash flow. The AI tailwinds that have caused bookings to grow exponentially in recent quarters haven't changed -- only spending priorities have, and temporarily. IBM's early leadership in quantum computing and the future potential of that side of the business are still intact.

In a nutshell, everything I liked about IBM from the perspective of a 5+ year time horizon still applies. And now I can buy shares at a discount.

Matt Frankel, CFP® has positions in International Business Machines. The Motley Fool has positions in and recommends International Business Machines. The Motley Fool has a disclosure policy.

On the surface, Netflix's (NASDAQ: NFLX) second-quarter earnings report wasn't terrible. Revenue came in slightly below expectations, but grew 13% year-over-year, and earnings per share grew by 11% and came in ahead of what analysts had been looking for. Membership growth, pricing increases, and ad revenue growth all contributed to the double-digit growth.

Even when it comes to forward guidance, there's not much to complain about. It gave a full-year outlook in line with its previous forecast and narrowed (but did not lower) its 2026 revenue guidance.

However, there was one item that investors seemed to have fixated on-Netflix's user engagement. And the stock fell by about 10% shortly after the earnings release.

Image source: Getty Images.

A reporting shift is bothering investors

The company's conference call featured several analyst questions about user engagement, a key focus for investors. And to put it mildly, it seems like the market didn't love the answers. For starters, Netflix called its user engagement "healthy" and said that there wasn't any significant change in viewership for the second season of some of its series versus the first.

On the other hand, management said it would reduce the frequency of its engagement reports, changing the cadence of its "What We Watched" reports from semiannual to annual starting in 2027. So, investors will still see engagement figures, only less frequently.

Now, Netflix claims the shift is to keep the focus on metrics such as revenue and profit. But the reality is that Netflix has been under scrutiny in recent years over whether or not engagement is declining. Reducing how often investors get fresh engagement data at a time when many are questioning it isn't exactly a good look.

Is this a smart move by Netflix?

There's a case to be made that this is a smart move. It isn't exactly unprecedented either. The company stopped reporting subscriber counts in 2025 to focus on revenue and profit, and there's a legitimate point that looking at engagement hours alone can be misleading -- for example, Netflix reported that live programming makes up 1% of viewing hours but pulls in the most advertising dollars.

Of course, this only works if the company can deliver on revenue growth, advertising growth, profit margins, and other metrics management wants investors to focus on. But with revenue guidance for the third quarter falling a bit short of expectations, there are some big questions surrounding whether that will be the case.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, completed the largest IPO in history earlier this year, and the initial reception was a positive one. However, shares have been under pressure recently and are now trading below their $135 IPO price.

The initial reason for the stock cooling off was simply the post-IPO hype running out of steam, but the latest move can be attributed to the delay of the company's much-anticipated Starship launch. But how much does this delay affect the investment thesis?

Why the Starship delay is (mostly) noise

To be perfectly clear, Starship is a big part of the long-term investment thesis. Once the Starship rocket (which is much larger than SpaceX's current launch vehicle) reaches the commercial flight stage, it should dramatically improve mass-to-orbit economics and set the company's launch business on a clear path to profitability. Longer-term, this is a crucial component of Elon Musk's plan to put data centers into orbit.

Image source: Getty Images.

However, a single delay like this does nothing to change the thesis. In fact, when it comes to development programs like Starship, delays, cancellations, and even outright failures are standard occurrences. As an example from a competitor, Rocket Lab's (NASDAQ: RKLB) highly anticipated Neutron rocket was initially planned to launch in late 2024 -- and we're still waiting. Delays are an expected part of a responsible engineering approach.

In addition, SpaceX's near-term revenue (and profit) driver is Starlink, not the launch program. Starlink and the massive AI compute deals the company has signed recently matter most over the next couple of years, and they're doing just fine. A week-long (or even a month-long) delay in the Starship timetable does nothing to change the addressable market opportunity or the company's competitive advantages. There's simply nothing else like Starship.

What does matter to the investment thesis?

It's important to take a step back and consider the most important drivers of long-term value for SpaceX:

• Starlink's growth and cash flow.
• The company's new and growing AI compute business, which has deals with Anthropic, Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG), and more.
• SpaceX's launch dominance. Most payloads launched into orbit today are carried by SpaceX rockets.
• Optionality for Starship (things like AI data centers in orbit and eventual interplanetary transport).

Don't get me wrong. Starship certainly plays a big part in this, especially the third and fourth points on the list. But whether Starship launches tomorrow, next week, or even in a few months, none of these things will be materially impacted.

Expect more volatility

SpaceX reached a high of $225.64 a few days after going public. Since that time (about a month ago), the stock has declined by about 45% as of this writing. And we're unlikely to see volatility subside anytime soon, regardless of what happens with Starship in the near term.

This is why the headline suggests that the stock dipping below its IPO price does matter. Investors should realize that only about 4% of SpaceX's shares actually trade, which is an extremely thin float, especially for a Nasdaq-100 component. When you combine that with the general AI stock sell-off we've seen recently and the pending lock-up expirations, any perceived negative news -- like the Starship delay -- can have a disproportionate impact on the stock price relative to the actual impact on the business.

Full disclosure: I still think SpaceX is a richly valued stock, even at the current price of about $125, and you aren't likely to find shares in my portfolio anytime soon. But it's important to emphasize that the Starship delay itself is likely to be a non-event for SpaceX's long-term potential.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Rocket Lab. The Motley Fool has a disclosure policy.

Over the past few years, mega-cap technology stocks have dominated the headlines, and for good reason. The performance of companies like Nvidia (NASDAQ: NVDA) and Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) has made owning anything other than the Magnificent Seven feel like a mistake.

Small-cap stocks, especially those outside of the technology sector, have underperformed for years. However, the tide seems to be turning. So far in 2026, small-caps are outperforming the S&P 500 by the widest margin in over two decades, and this could be just the beginning of a longer trend.

Image source: Getty Images.

One low-cost ETF that investors might want to take a closer look at is the Vanguard Small-Cap Value ETF (NYSEMKT: VBR), which holds 835 smaller companies, most of which have below-average price-to-book and price-to-earnings ratios relative to peers.

The Vanguard Small-Cap Value ETF

The Vanguard Small-Cap Value ETF is an index fund that tracks a diversified index of smaller companies with value characteristics. As mentioned earlier, it owns 835 different stocks with a median market cap of about $10 billion.

On average, stocks held by this index fund have a price-to-earnings ratio of 17.8, compared with 28.1 for the S&P 500 index. As you might expect from a value stock fund, the Vanguard Small-Cap Value ETF is light on technology, but has large concentrations in industrials, financials, and consumer discretionary stocks. To name a few, the fund's larger holdings include NRG Energy (NYSE: NRG), Williams-Sonoma (NYSE: WSM), and Alcoa (NYSE: AA).

Although this is a weighted index fund, no single stock accounts for more than 1.25% of the fund's assets. And like most Vanguard ETFs, the Vanguard Small-Cap Value ETF has a low expense ratio (0.05%). These are the annual investment fees, which will be reflected in the fund's performance over time.

Still a good value

As I said earlier, small-cap stocks have outperformed this year, and the Vanguard Small-Cap Value ETF is up about 13% so far in 2026. But there is still a significant valuation gap between large-cap and small-cap stocks, and there could still be plenty of upside potential ahead.

For one thing, value stocks tend to benefit most from interest rate cuts, as they tend to carry more floating-rate debt than their large-cap counterparts. We're still in a relatively high-rate environment, plus small-cap stocks still trade at a significant discount to their historical average P/E ratios.

To be clear, I'm not saying I expect rates to fall right away or that the valuation gap between small- and large-cap stocks to close right away. But over the next several years, factors like these could lead to continued outperformance.

Matt Frankel, CFP® has positions in Vanguard Small-Cap Value ETF. The Motley Fool has positions in and recommends Alphabet, NRG Energy, Nvidia, and Williams-Sonoma. The Motley Fool has a disclosure policy.

Wendy's (NASDAQ: WEN) becoming the next big meme stock wasn't exactly on my bingo card for 2026, but here we are. A surge of interest among Reddit (NYSE: RDDT) traders caused the beaten-down restaurant stock to soar by as much as 50% from its recent lows.

Retail investors chasing meme stocks -- especially after their initial spike -- rarely works out well. Volatile moves based on investor sentiment (not earnings or business momentum) are impossible to predict, and that's what is happening here. Wendy's has been dealing with declining same-store sales, brand issues, and other problems in its aging fast-food business. But that's not to say that there aren't some excellent stocks to consider in the restaurant industry right now. Here are two in particular that deserve a closer look.

Image source: Getty Images.

The restaurant operating system

Toast (NYSE: TOST) has been beaten down from its highs on fears that AI advancements will disrupt its business. But it has a stronger competitive moat than you might think. Not only does Toast provide an entire restaurant ecosystem that replaces functions restaurants have historically paid dozens of vendors for, but it is also a full-stack provider, meaning it has proprietary hardware and software. And because it is used in more than 171,000 restaurant locations, it can help reduce training costs (many new employees will already be familiar with the platform).

In the latest quarter, Toast's annual recurring revenue (ARR) increased 26% year-over-year, and the business was highly profitable. With a price-to-sales valuation near its lowest level as a publicly traded company and a stock price about 45% below its 52-week high, Toast could be an excellent bargain at current levels.

The turnaround is real

Starbucks (NASDAQ: SBUX) made a big change a couple of years ago, hiring longtime Chipotle (NYSE: CMG) leader Brian Niccol to lead a turnaround. Starbucks had been struggling with declining same-store sales, technology issues, and customer experience challenges. In short, its situation wasn't unlike Wendy's.

However, we're starting to see real signs of progress in the numbers. Niccol's strategic pivot, which was known as the "Back to Starbucks" initiative, has dramatically improved service efficiency. There have been several positive changes to the customer experience. And Starbucks is finally doing a great job of product innovation (such as its protein-enhanced beverages).

Starbucks' comparable sales in North America declined for about two years but are finally starting to recover. In the most recent quarter, Starbucks reported 32% year-over-year EPS growth and is now expecting full-year comparable sales growth of at least 5%.

The bottom line is that chasing meme stocks like Wendy's might look fun, but trying to time entry and exit points on a short-term, volatile trade is usually a losing battle. Instead, focus on making long-term investments in businesses whose fundamentals are heading in the right direction.

Matt Frankel, CFP® has positions in Starbucks. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Reddit, Starbucks, and Toast. The Motley Fool recommends the following options: short September 2026 $35 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

Oracle (NYSE: ORCL) is set to be a major beneficiary of the AI infrastructure boom. The company has accumulated a $638 billion backlog of business, which is equal to about eight years of revenue at the current annual run rate. In the most recent quarter alone, $67 billion in new AI infrastructure contracts were signed.

However, it's fair to say that many investors are a little skeptical, with the stock down by more than 55% from its 52-week high. There are two main unanswered questions that seem to be weighing on Oracle's stock price. First, can the companies committing to spend billions with Oracle actually meet these obligations? Second, can Oracle deliver on its backlog while balancing the need to raise capital to do so?

Image source: Getty Images.

Oracle's massive backlog

Oracle reported $638 billion in remaining performance obligations, or RPO, in its most recent quarterly report. RPO is Oracle's term for contracted future revenue, or backlog, and this figure is 363% higher than it was a year ago. For context, this is now larger than the backlog of much larger tech company Microsoft (NASDAQ: MSFT).

Now, over half of this is reportedly from OpenAI. The AI company behind ChatGPT has signed a contract worth more than $300 billion over a five-year period starting in 2027, according to multiple reports, which is by far the largest individual cloud deal ever signed. Other major customers contributing to the backlog include Meta Platforms (NASDAQ: META), SpaceX (NASDAQ: SPCX) through its xAI subsidiary, Nvidia (NASDAQ: NVDA), and other tech heavyweights.

It's also important to clarify what "AI contracts" include. The primary product is OCI (Oracle Cloud Infrastructure) compute capacity, which essentially refers to rented data center capacity and GPUs. Most contracts are multi-year, and only about 12% of the backlog is expected to convert to revenue over the next year.

The unanswered questions investors need to consider

As mentioned, there are two big unanswered questions.

First, can Oracle's customers reasonably fulfill their contracted obligations, especially when it comes to OpenAI? So far, OpenAI hasn't had much trouble raising capital, but it is still a private, cash-burning company, and the $300 billion or so it has committed to spend with Oracle isn't its only large obligation. The AI company has committed to about $350 billion in spending with Broadcom (NASDAQ: AVGO), $250 billion with Microsoft (Azure), about $100 billion on Nvidia systems, as well as deals with AMD (NASDAQ: AMD), Amazon (NASDAQ: AMZN), and others. In all, OpenAI is estimated to have committed well over $1 trillion in hardware and cloud infrastructure spending.

With spending commitments like that, it's not surprising that the market is a little skeptical. In fact, it was reported last week that OpenAI plans to delay its IPO, and this was a big reason why Oracle's stock has had its worst week in many years.

The second question is how much Oracle will need to erode its financial condition to deliver on these orders. In the current fiscal year, Oracle's estimated $95 billion in capex will require it to raise $40 billion in new capital, pushing its long-term debt above $100 billion. Free cash flow turned negative in the company's most recent fiscal year for the first time in a while, and this is likely to be the case for the foreseeable future. Plus, Oracle's gross margins could come under pressure as infrastructure costs rise, and there's always the longer-term risk of AI disrupting the enterprise software industry.

Is Oracle stock a bargain or a trap?

Let's be clear. If Oracle can successfully deliver on its obligations and get a strong ROI on its capex, the company's stock could be an absolute bargain at the current level. And to be fair, the company has a long track record of solid execution.

At its current price, Oracle stock trades for just over 18 times forward earnings estimates. The last time Oracle had a price-to-sales ratio at its current level was in early 2024, largely before the AI infrastructure spending wave began. And this is for a company that not only has a massive backlog but is also growing its actual revenue at 21% year-over-year. It's also worth noting that Oracle's guidance for the current quarter calls for 28% revenue growth (at the midpoint), which would represent a significant acceleration.

In a nutshell, Oracle has some major risk factors, but the price is right, and the risk-reward dynamics look attractive at these levels. In fact, I recently opened a small position in Oracle, and plan to add more if the stock remains at or near these levels.

Matt Frankel, CFP® has positions in Advanced Micro Devices, Amazon, and Oracle. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Broadcom, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.

To say that small-cap stocks haven't been a great investment for the past several years would be an understatement. The S&P 500 has been carried to all-time highs by the Magnificent Seven, while the Russell 2000 small-cap index has dramatically underperformed. In fact, over the 10-year period through the end of 2025, the S&P 500 produced a 323% total return -- that's about 120 percentage points more than the Russell 2000.

Now that we're halfway through 2026, it seems like the tide might be turning. The Russell 2000 has surged by more than 20% this year, its best first-half performance since 1991. And it isn't lagging the S&P. In fact, the last time small-cap stocks were outperforming the S&P 500 by this much halfway through a year was way back in 2003.

Image source: Getty Images.

Why are small-cap stocks outperforming in 2026?

There are several reasons why small-cap stocks are finally outperforming, but the two most significant are the closing of a valuation gap and AI tailwinds finally reaching smaller companies. Let's take these one at a time.

At the beginning of 2025, small-cap stocks were trading at their lowest valuation relative to large caps since the late 1990s. And throughout 2025, the gap widened further. In fact, at the start of 2026, the average stock in the Russell 2000 traded for about 18 times forward earnings. For the S&P 500, the forward P/E multiple was more than 26.

To be sure, there are some good reasons why the S&P 500 commanded a premium. The index is heavily weighted toward mega-cap tech stocks -- in fact, the 10 largest companies make up about 40% of the index. And these companies experienced rapid earnings growth in recent years.

However, the AI trade has now started to trickle down to small caps. Smaller suppliers, chipmakers, and other "picks and shovels" AI plays have been big winners. As a result, estimates for Russell 2000 components' earnings growth for 2026 have risen from 23% to 38% since the beginning of the year, with AI infrastructure plays the main driver.

How to add small-cap exposure to your portfolio

It could be a mistake to think that, because small-caps have outperformed so far in 2026, it won't last much longer. The last time the valuation gap was as high as it was at the beginning of this year (1999), small-cap stocks went on to outperform for more than a decade. There's no guarantee this will happen again, but small-cap stocks are still relatively undervalued.

If you want exposure in your portfolio, there's no need to pick individual small-cap stocks if you aren't comfortable doing so. A broad small-cap ETF like the Vanguard Russell 2000 ETF (NASDAQ: VTWO) is a low-cost way to go, or the Vanguard Small-Cap Value ETF (NYSEMKT: VBR) could be worth a look, as it focuses on the cheapest small-cap stocks. I own both of these ETFs in my stock portfolio, and believe they'll be excellent investments for years to come.

Matt Frankel, CFP® has positions in Vanguard Russell 2000 ETF and Vanguard Small-Cap Value ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Even after cooling off from its post-IPO rally, Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, has a market cap of $2.25 trillion and is one of the most valuable companies in the world. Based on its revenue of about $19.3 billion over the past four quarters, SpaceX has a price-to-sales ratio of about 116.

Let's be clear. That's an incredibly high multiple. Some of the most rapidly growing AI infrastructure stocks trade for P/S multiples in the 40-50 range. The average S&P 500 company trades for about 3x sales. But there's more to the story. The price-to-sales ratio of 116 is a backward-looking metric. The more important thing to consider is whether SpaceX's revenue in 2027, 2028, and beyond will justify it.

Image source: Getty Images.

What will SpaceX's revenue be?

SpaceX's revenue is a unique situation because its trailing 12-month revenue and what investors should expect going forward are two different things.

The biggest reason is SpaceX's recent AI compute deals. Between three separate deals with Anthropic, Alphabet's (NASDAQ: GOOGL)(NASDAQ: GOOG) Google, and Reflection AI, SpaceX will be receiving about $2.32 billion per month in AI compute revenue once all three deals are in effect (starting in October). That's $27.8 billion in annual revenue from these three deals alone.

Beyond the AI compute deals, it's important to point out that SpaceX's Starlink satellite internet service grew revenue by 50% year-over-year in 2025 and has barely scratched the surface of its addressable market opportunity. Plus, once SpaceX's much larger Starship rocket begins commercial flights, it could be a big revenue growth driver.

SpaceX's revenue will almost certainly grow substantially in the second half of 2026 and beyond. Looking ahead to 2027, there's a solid base case to be made that SpaceX will get about $22-24 billion in revenue from Starlink, $30 billion from xAI (including the AI compute deals, the X social media platform, and Grok, and about $6 billion from the rocket launch business, for a total of about $59 billion. This would give SpaceX a much lower P/S multiple of 38 based on its current valuation, and revenue could potentially be even higher if the company gets additional AI compute deals.

Is SpaceX worth buying?

The biggest caveat is that even a P/S of 38 is expensive, and we have no idea whether SpaceX will be profitable in 2027. There will likely still be a lot of future revenue and earnings growth priced into the stock. The bottom line is that (assuming its AI compute deals produce the three years of revenue that is expected) SpaceX's stock is effectively much less expensive than its 116x P/S multiple implies. But it's still an expensive business. Approach it with that in mind.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

It's fair to say that investors were skeptical heading into Micron's (NASDAQ: MU) latest earnings report. The stock had already gained more than 700% over the previous year, and had posted several blowout earnings reports in a row. In fact, on the day of Micron's latest earnings report, the stock was down significantly during the trading day before the afternoon announcement.

However, it's fair to say that Micron knocked it out of the park. Again. The stock soared to a new all-time high, and even after a brief pullback, it now has a market capitalization of nearly $1.3 trillion. This is from a memory company that was largely considered a boring, commoditized business just a couple of years ago.

Even with the incredible performance, Micron could still have plenty of upside ahead. In fact, most analysts who follow the stock think that's exactly what will happen. Here's a rundown of where Micron's business stands today, and where Wall Street sees it heading in the future.

Image source: Getty Images.

Micron's latest earnings were stellar

It's difficult to overstate how strong Micron's latest numbers are. In its fiscal third quarter, the memory giant reported $41.46 billion in revenue, nearly 350% more than the same quarter last year, and up a stunning 74% sequentially. On the bottom line, the company reported $25.11 in earnings per share -- nearly $5 more than analysts had expected. As you probably expect, data center revenue has been the key driver, and is now at a run rate of more than $100 billion annualized.

Micron isn't done yet.

In the current quarter, Micron is expecting $50 billion in revenue and $31 in EPS, representing sequential growth of 21% and 23%, respectively.

Perhaps most significantly, Micron announced that it is pivoting to strategic customer agreements (SCAs), which essentially commit customers to billions in future purchases. The company reported 16 of these along with its results, most of which have five-year terms running through the 2030 calendar year. The company reported cash deposits and related commitments of $22 billion from this initial wave of agreements, and 14 of the 16 agreements have a cumulative revenue potential of about $100 billion over their five-year terms.

This shift provides a win-win situation: supply visibility for Micron's customers, and much-needed revenue visibility beyond the next few years for Micron as it spends aggressively to increase capacity.

Analysts see even more upside ahead

Within a few days of Micron's earnings report, the stock received about two dozen analyst upgrades or new ratings, and no significant downgrades. Not only is Micron essentially sold out of its core products through 2027 at a minimum, but it now has long-term customer agreements that should keep revenue and cash flow growing for the next several years.

Is Micron stock still a smart buy now, even after the incredible ascent of its stock price? The average estimate calls for about $98 in earnings per share in the 2027 fiscal year, implying that Micron is trading at about 11 times forward earnings as of this writing. And this is for a company with sequential earnings and revenue growth rates exceeding 20%.

The billion-dollar question is whether this will be sustained. It isn't just that Micron is selling a lot of memory right now. It certainly is, but its capacity constraints have led to incredible pricing power. But as Micron's capacity increases or AI infrastructure spending cools off, what happens then? That's the risk you're taking by investing at these levels. If you decide to invest, approach your position size with that in mind.

Matt Frankel, CFP® 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), better known as SpaceX, has three distinct parts of its business -- rocket launches, satellite internet, and the xAI artificial intelligence business. While the first two are certainly impressive, market-leading businesses, the AI division has produced the biggest headlines in recent months.

In fact, although xAI was the biggest drag on SpaceX's bottom line in 2025, it's starting to look like 2027 and beyond could be a very different story. Here's how SpaceX's new AI compute business has already more than doubled its revenue, where it could go from here, and why investors should pay attention.

Image source: Getty Images.

Three AI compute deals -- so far

Here's a quick rundown of where SpaceX's AI compute business stands today. And keep in mind that all of this is revenue that didn't exist prior to its IPO:

• First, Anthropic signed a deal to access more than 300 MW of compute capacity and more than 220,000 Nvidia GPUs at SpaceX's Colossus 1 data center. This agreement brings in $1.25 billion per month for SpaceX through May 2029. That's $18 billion per year from this deal alone.
• Next, Google signed a compute deal that begins in October and runs through June 2029, giving the hyperscaler access to about 110,000 Nvidia GPUs and is expected to generate $920 million in monthly revenue.
• Finally, the smallest of the three deals, but still a highly significant development, is a deal from fast-growing start-up Reflection AI to access Nvidia chips at SpaceX's Colossus 2 data center for $150 per month.

Combined, the three deals will provide about $2.32 billion in monthly revenue, or $27.8 billion annualized. Keep in mind that SpaceX's business -- including Starlink, the rocket launches, and xAI -- combined for $18.7 billion in revenue in 2025. Even though Starlink and the rocket business continue to scale rapidly in 2026, this has more than doubled SpaceX's revenue.

Not only has this generated revenue, but it's also an example of a savvy way to turn a problem (xAI was using only about 11% of its compute capacity for its own purposes) into a win.

Who could be next?

SpaceX clearly stated in its S-1 that it "expects to enter into additional similar services contracts for compute capacity with third parties," and while this statement was made before the most recent deals, it indicates that this business could be a big part of the company's AI future.

There's no way to know who might be next, but there's no shortage of potential compute customers. Other AI providers, such as OpenAI, are an obvious example, as are hyperscalers like Microsoft (NASDAQ: MSFT).

Of course, companies like Microsoft, Google, and others can (and do) build their own data centers -- that's a big portion of the hundreds of billions of dollars in capital expenditures they've announced for 2026. But a capital-light approach (renting instead of owning) is likely starting to look more appealing, especially now that the AI build-out is scaling to the point where these companies are being forced to take on more debt and spend all of their free cash flow to keep up.

In addition to any of the other potential customers who will undoubtedly need more computing power in the future than they do today, it's also important to mention that there's certainly the possibility that the three existing customers could expand their deals over time. For example, Anthropic's business has grown tenfold in the past year, and if it continues to grow exponentially, the company's compute needs could get much larger.

Why is this so important?

Not only have SpaceX's three AI compute deals more than doubled its revenue, but they could also be a big step forward in showing investors a path to profitability. In fact, the AI compute business has the potential to become the highest margin part of SpaceX. Consider that other GPU cloud providers like CoreWeave (NASDAQ: CRWV) operate at gross margins near 70%, and in SpaceX's case, margins could be even higher as SpaceX's Colossus data centers were already built and were simply underutilized. Now, Starlink has excellent margins, but the AI compute business has massive potential for both top-line growth and producing billions in free cash flow.

To be clear, even with all of this in mind, SpaceX is still not a cheap stock. Even if the company's revenue run rate reaches $50 billion by the end of 2026, it will still be valued at about 40 times sales (based on the current stock price) and will lack any established track record of profitability. So, I'm not saying that SpaceX is a buy based on its AI compute business itself. There's a lot that will need to go well throughout its business to ultimately justify the current valuation.

Having said that, the progress in the AI compute business has been impressive to say the least. If SpaceX can continue to build it out, it could be a big win for the company and its investors.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.

Social Security isn't exactly in the best financial situation. Although it ended 2025 with nearly $2.6 trillion in reserves, the program is running a rapidly widening deficit. According to the latest projections, Social Security's trust fund reserves are expected to be depleted in 2032. If no action is taken, across-the-board benefit cuts would be necessary.

The good news is that history tells us that something will be done. It would absolutely make things easier in the long term if solutions were put in place while we're still years away from depletion, but that isn't strictly necessary. In fact, the last time Social Security was in danger of running out of money, a ninth-inning solution is exactly what happened.

Image source: Getty Images.

How we fixed Social Security last time

In 1983, Social Security's trust fund was rapidly declining and was just a few months away from being unable to pay all of its promised benefits. This created the political urgency to get a deal done, and after some back-and-forth negotiations, the Republican administration and Democratic leaders in Congress reached an agreement.

This led to the 1983 Social Security Amendments being signed into law by President Ronald Reagan, which made the following changes:

• It increased the full retirement age from 65 to 67, with the change phased in over several decades. In fact, the first people to reach full retirement age at 67 will get there in 2027.
• There were payroll tax increases already scheduled, but they were implemented more quickly after the Social Security Amendments were signed into law. This is where the current 6.2% payroll tax rates on employers and employees came from.
• The amendments made some of the higher-income retirees' Social Security benefits taxable for the first time. Today, as much as 85% of the benefits of higher-income retirees can be taxable, and this legislation is what made that possible.
• Annual cost-of-living adjustments (COLAs) were delayed by six months, saving Social Security about $40 billion throughout the 1980s.
• Social Security coverage was expanded to newly hired federal employees beginning in 1984, which increased the number of workers paying into the system.

Why we're here again

The Social Security Amendments of 1983 were expected to keep Social Security solvent for 75 years, so the program should have theoretically been fine until 2058. So, why is it now expected to run out of money in 2032?

The answer is that the Social Security Administration made the 75-year estimate based on the current demographic conditions at the time. Americans not only have longer life expectancies now, but, with the massive baby boomer generation reaching retirement age, there are significantly fewer workers per Social Security beneficiary than in the early 1980s.

How will we fix Social Security this time?

There are many different changes that have been proposed to Social Security, with most falling into one of two baskets -- benefit reductions or tax increases. We could raise the full retirement age again, reduce benefits for high-income retirees, increase the payroll tax, raise or eliminate the taxable wage cap, or a number of other solutions. There have also been some outside-the-box solutions proposed, such as allowing some of the trust fund assets to be invested in the stock market instead of just Treasury bonds.

The most likely solution will involve some combination of changes, but there's no way to know exactly what that combination might be. Hopefully, we won't wait until the clock is about to run out to fix the problem, as any solutions wouldn't need to be as drastic while the program still has substantial reserves, but history tells us that something can and likely will be done.

The Motley Fool has a disclosure policy.

There is no shortage of dividend-focused ETFs available to investors, but most people focus on high-yield versions or on a specific category of stocks, like large-cap dividend payers. And to be fair, these can be excellent investments, especially for older investors who rely on their portfolios for current income or plan to do so in the next few years.

On the other hand, too many people ignore dividend growth when choosing an ETF, but there are good reasons it could be a smarter way to go. For one thing, a growing income stream can help you keep up with inflation over time. Plus, stocks with a strong history of dividend growth tend to have excellent visibility into future cash flows.

One ETF in particular that could be worth a closer look is the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG). As we'll see, this can produce not only a growing income stream, but potentially superior total returns compared to many other dividend-focused ETFs.

Image source: Getty Images.

What is the Vanguard Dividend Appreciation ETF?

The Vanguard Dividend Appreciation ETF is an index fund that focuses on large-cap companies with a strong track record of dividend growth. Specifically, it tracks the S&P U.S. Dividend Growers Index, which requires that stocks have increased dividends for at least 10 consecutive years.

Like most Vanguard ETFs, this one is cheap. It has a 0.04% expense ratio, which is among the lowest of any ETF on the market. This means that for every $1,000 invested, your annual investment costs will be just $0.40, which will be reflected in the fund's performance over time.

Perhaps the biggest difference between the Vanguard Dividend Appreciation ETF and other popular dividend ETFs is that it doesn't focus on current yield. This allows it to include high-growth stocks with low yields but a strong history of dividend increases. For example, tech heavyweight Broadcom (NASDAQ: AVGO) is the ETF's largest holding, and you'll also find Apple (NASDAQ: AAPL), Visa (NYSE: V), and Cisco Systems (NASDAQ: CSCO) among the top 10 -- stocks with low current yields that are often excluded from other dividend ETFs.

The portfolio has 331 dividend stocks altogether and is a weighted index, meaning certain stocks account for more of the fund's holdings than others. Over the past 10 years, the Vanguard Dividend Appreciation ETF has delivered 13.3% annualized total returns for investors -- significantly outperforming most "high dividend" ETFs over the same period, despite having a significantly lower dividend yield.

Growth and future income

With a dividend yield of about 1.5% as of this writing, it's easy to see why this ETF might get overlooked in favor of, say, the Vanguard High Dividend Yield ETF (NYSEMKT: VYM), which has a significantly higher yield. But the current yield isn't the point -- if the stocks in the ETF grow their dividends at an average rate of about 7% per year, your income will roughly double every decade. After 20 years, you'll be generating four times the income you started with. After 30 years, eight times the initial income.

It's also worth noting that most of the ETF's major holdings, including all four mentioned in the last section, have a record of even faster dividend growth. As you can see in the chart below, the ETF's dividend payments have roughly doubled in just the past eight years.

VIG Dividend data by YCharts.

The bottom line is that the Vanguard High Dividend Yield ETF allows you to set yourself up for an excellent future income stream when you need it, as well as for potentially market-beating total returns in the meantime. If you are still a decade or two from retirement, it could be worth a closer look.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Broadcom, Cisco Systems, Vanguard Dividend Appreciation ETF, Vanguard High Dividend Yield ETF, and Visa. The Motley Fool has a disclosure policy.

Now that the dust has settled on the massive IPO of Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, another trillion-dollar listing could be just around the corner.

Anthropic, the company behind the Claude AI tools, has already filed a confidential S-1, indicating that it could go public within the next few months. And with its latest fundraising round occurring at a $965 billion valuation, we could see a market cap well above $1 trillion when it does.

Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) has quietly been one of the biggest winners of SpaceX's rise, owning about 6% of the space and AI conglomerate. But its early investments in Anthropic could pay off even more.

Image source: Getty Images.

Alphabet's investments in Anthropic

In the first quarter of 2026, Alphabet reported its highest single-quarter profit ever. But $28.7 billion of the $62.6 billion total came from investment gains, not from Google's numerous businesses. Most of this was from marking up its Anthropic investment.

As of the latest information, Alphabet owns about 14% of Anthropic. This came from four different investments, ranging from a $300 million investment in April 2023 to a $10 billion contribution to the latest fundraising round in April of this year. The company has committed to investing an additional $30 billion, contingent on Anthropic meeting performance milestones.

What it means for investors

Of course, with a market capitalization of more than $4 trillion, it takes a lot for an investment to move the needle for Alphabet. But Anthropic has the potential to do exactly that.

Based on the latest private valuation, Alphabet's stake in Anthropic is worth about $135 billion. If the AI leader hits a $1.5 trillion valuation, Alphabet's investment gains $75 billion. If Anthropic rises to say, a $3 trillion valuation over the next few years, which is entirely possible given its business momentum, Alphabet would gain another $210 billion, and its Anthropic investment would represent a significant percentage of the company's total value. Alphabet already has a roughly 10x return on the $13.3 billion it has invested in Anthropic, but that could be just the starting point.

However, the most significant part of the investment might not be the Anthropic stake itself. As part of Google's latest investment, Anthropic has committed to using at least 5 GW of computing capacity on Google Cloud over the next five years. So, not only would the investment yield billions in equity gains if Anthropic's valuation rises, but it would also create a relationship with Anthropic that should generate billions in annual revenue for Alphabet.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

I've been a fan of dividend stocks ever since I started investing. I own more than a dozen of them in my portfolio, and that's not including several ETF holdings that make regular distributions. To be clear, I buy every stock in my portfolio with the intention of holding for the long term, and that's especially true when it comes to income stocks.

However, there are only a select few that I consider to truly be "forever stocks," which I can't see myself selling unless something dramatically changes (e.g., the company gets acquired). Here are two in particular that I've owned for years and plan to keep for decades to come.

Image source: Getty Images.

My first (and favorite) dividend stock

Realty Income (NYSE: O) was the first stock I bought specifically because it was an excellent income investment. I added shares of the massive real estate investment trust (REIT) to my portfolio in 2014 and have added to the position many times since.

I've called Realty Income my favorite all-around dividend stock in the market, as it is an excellent combination of consistently growing income, market-beating total return potential, and low volatility.

If you aren't familiar with the company, Realty Income owns about 15,700 properties, most of which are leased to retail tenants. It specifically chooses high-quality tenants whose businesses are recession-resistant and aren't easily disrupted by e-commerce competition. Not only that, but tenants sign long-term triple-net leases, which have built-in annual rent increases and require tenants to cover taxes, insurance, and maintenance costs.

Realty Income has increased its dividend for more than 100 consecutive quarters. It has a 5.3% dividend yield, paid monthly. And it has produced annualized total returns of 13.6% since its 1994 NYSE listing.

A high yield at a discount

Vici Properties (NYSE: VICI) hasn't exactly been a top performer lately. It specializes in casino properties, and Las Vegas tourism has struggled recently, plus the extremely long-term nature of its leases (40+ years) makes it highly sensitive to interest rates, which have remained stubbornly high.

However, this is an excellent business with a 6.8% dividend yield and significant growth potential. It owns a portfolio of iconic assets, including Caesars Palace, MGM Grand, and The Venetian in Las Vegas. It has a strong balance sheet and excellent credit, which gives it the financial flexibility to grow. And it has an established track record of adding shareholder value when it finds an attractive acquisition target.

As of this writing, Vici trades for about 10.8 times expected 2026 funds from operations (FFO-the real estate equivalent of "earnings"). It's a rare bargain in an expensive market, and it's a position that I plan to add to significantly and hold forever.

Matt Frankel, CFP® has positions in Realty Income and Vici Properties. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.

Along with solid earnings results, cloud-based cybersecurity leader CrowdStrike (NASDAQ: CRWD) announced a 4-for-1 stock split, which will go into effect on July 2. This will help make CrowdStrike's stock more accessible to retail investors after it has soared by roughly 60% so far in 2026.

To be sure, CrowdStrike's business has been performing exceptionally well, and it has some massive opportunities ahead of it. But after the stock's rapid rise this year, is it still worth buying before its split goes into effect?

Image source: Getty Images.

CrowdStrike's stock split

As mentioned, CrowdStrike will start trading on a split-adjusted basis on July 2. You may see some other dates mentioned, such as a record date, but for most investors, here's the key point. If you own 100 shares of CrowdStrike today, you'll have 400 shares in your portfolio when you log into your brokerage account on July 2, with each of those shares trading for about one-fourth of their previous value.

Excellent business momentum

CrowdStrike's business is performing quite well, with 26% year-over-year revenue growth in its most recent fiscal quarter. It added $256 million in net new annual recurring revenue (ARR), the most added in a fiscal first quarter in company history. On the bottom line, CrowdStrike generated $468 million in free cash flow, an all-time high, and it handily beat earnings expectations.

Not only that, but we're seeing clear signs that the agentic AI revolution is likely to be a big tailwind for CrowdStrike, not a threat as many originally thought. CEO George Kurtz said that "CrowdStrike is AI security infrastructure, critical to successful AI adoption."

Not a cheap stock

The biggest risk factor for investing in CrowdStrike is valuation. While shares trade for about 12% below recent highs, the company is still valued at about 34 times trailing revenue, one of the highest multiples for a large-cap stock in the S&P 500.

It's fair to say that CrowdStrike is pricing in quite a bit of ARR growth at these levels. If it becomes the go-to cybersecurity platform for agentic AI security over the next few years, the current valuation could look cheap. But a lot will need to go right to justify the stock's current price, and any missteps could cause significant volatility.

To be clear, this is an excellent business. But it's not a good idea to buy CrowdStrike (or any other stock for that matter) just because it is splitting its shares. If you decide to buy, be aware that you're paying a hefty premium, and size your position accordingly.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.

Space Exploration Technologies Corp. (NASDAQ: SPCX), better known as SpaceX, is a more complex business than many people believed prior to its recent IPO. In addition to its industry-leading rocket launch business, the company has the highly profitable Starlink satellite internet service and the AI-focused xAI platform.

When it comes to the xAI business, much of the investment thesis has centered around the Grok AI model and long-term aspirational projects like putting data centers into orbit. But with three major deal announcements in recent months, investors are starting to see that there is more to SpaceX's AI business than many had thought. They're also seeing that it could become the company's primary revenue driver as soon as next year.

SpaceX's three compute deals -- so far

It was a big surprise for many investors when SpaceX announced a deal with Anthropic shortly before its IPO. The AI company behind the popular Claude platforms agreed to lease about 300 megawatts of AI compute from xAI, the entire capacity of the Colossus 1 data center.

Image source: Getty Images.

The deal terms include Anthropic paying SpaceX $1.25 billion per month for a three-year term (ending May 2029), which equals $15 billion in annual revenue. For context, SpaceX's entire 2025 revenue was $18.7 billion, so this deal alone was a massive needle-mover.

Next, Google's parent company Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) agreed to lease about 110,000 Nvidia (NASDAQ: NVDA) GPUs from SpaceX facilities, paying $920 per month beginning in October. So, this deal adds about $11 billion in annualized revenue.

Just recently, Reflection AI became the company's third AI compute customer, agreeing to pay $150 per month ($1.8 billion per year) to access Nvidia AI chips at the Colossus 2 data center.

Between these three deals, SpaceX has added about $27.5 billion in annual revenue. Just for comparison, this means SpaceX just added about five times the annual revenue of cybersecurity giant CrowdStrike (NASDAQ: CRWD).

What's next?

This new revenue stream represents an impressive strategy pivot. The company's Grok AI model was using only about 11% of its GPU capacity, so SpaceX decided to monetize the excess capacity.

Most significantly for SpaceX investors, this adds a large stream of recurring, high-margin revenue to a business that previously had an investment thesis based on things they might be able to accomplish years in the future. With many enterprise AI companies currently unable to secure Nvidia chip allocations as quickly as they need them, it wouldn't be too surprising to see this side of the business grow significantly over the next few years.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, CrowdStrike, and Nvidia. The Motley Fool has a disclosure policy.

Space Exploration Technologies Corp. (NASDAQ: SPCX), better known as SpaceX, has only been publicly traded for less than two weeks, but it has already taken investors on quite a rollercoaster ride.

The IPO itself raised $85 billion for the company at a valuation of about $1.8 trillion, with an initial share price of $135. However, the SpaceX IPO was highly oversubscribed (meaning there was more demand than there were shares available), and by the time it opened for trading on the public market, SpaceX shares were over $150.

Over the next few days, SpaceX continued to rally as the initial wave of interest drove strong buying activity, and the stock price reached $225.64, briefly making the company's market capitalization greater than that of Microsoft (NASDAQ: MSFT).

Now, we've come full circle. As I'm writing this (Tuesday morning), SpaceX is trading for about $149 per share after three consecutive declines, including a sharp 16% plunge on Monday. So, is it time to buy now that shares trade at a price below the level at which the first open-market trades took place?

Image source: Getty Images.

Why is SpaceX down?

The decline in SpaceX stock appears to be a combination of the initial wave of demand for shares post-IPO cooling off and investor skepticism about SpaceX's capital needs.

As mentioned, the biggest decline happened on Monday, although SpaceX has been in a downtrend for the past few days. And the main catalyst for the steep decline was the announcement that the company plans a $20 billion bond offering to refinance the bridge loan on its balance sheet.

The reaction isn't necessarily to the bond offering itself. In fact, using investment-grade debt to refinance a higher-interest bridge loan is generally a smart move. But it's the fact that SpaceX just raised $85 billion, and this implies that much of the IPO proceeds are already committed elsewhere.

Should you buy?

SpaceX still isn't a cheap stock, although its valuation seems more reasonable now than it did just a few days ago. That's especially true given the three AI compute deals the company has announced, which collectively will add nearly $28 billion in annual revenue.

One thing to keep in mind is that SpaceX is likely to be a volatile stock for the foreseeable future. Not only do stocks with elevated price-to-sales valuations generally have high volatility, but SpaceX has a multi-tranche lockup expiration that allows insiders to sell shares at certain points over the next year or so.

If you have a multi-year time horizon and want to own SpaceX in your portfolio, the current price can make sense. But it could be a good idea to build a position in SpaceX (or any other volatile stock on your radar) gradually, rather than all at once.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.

Space Exploration Technologies (NASDAQ: SPCX) has taken investors on quite a roller coaster ride since its highly successful IPO. Just four days after raising $85 billion at a share price of $135, SpaceX reached as high as $225.64, and was temporarily more valuable than both Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN).

Now, the stock has reversed course. While SpaceX still trades above its IPO price (at least, for now, shares have fallen for three days in a row, including a 16% decline on Monday. In this article, we'll take a look at what led to the decline and whether the stock could be a buying opportunity now.

Image source: Getty Images.

Why did SpaceX's stock fall?

In just three days, SpaceX has retreated from its all-time high and has given back hundreds of billions of dollars in market capitalization. To be perfectly clear, there isn't any alarmingly bad news involving the company, but there are some reasons behind the price action.

The first is likely to be simple profit-taking following the stock's initial post-IPO rally. After all, many people bought shares at $135 and understandably could have been tempted to hit the sell button when it passed $200 after just a few days. The stock's initial rally was likely due to an oversubscribed IPO, meaning there was more demand for shares than there were shares available. Once the supply demand dynamics started to shift, it's not surprising to see the price move in the other direction.

Monday's decline was the worst of the three days, and came on the same day that SpaceX announced a $20 billion bond offering, with the goal of using the proceeds to repay its outstanding bridge loan. To be clear, investors already knew about the bridge loan (it was used to fund the xAI acquisition), and refinancing it with investment-grade bonds isn't exactly a bad move. However, the fact that SpaceX is raising additional capital to repay it, even with over $100 billion on its balance sheet, suggests the company's capital needs could be higher than investors thought.

The news isn't all bad

SpaceX has reported several key wins, including one that got somewhat buried in the news on Monday. In addition to the deals SpaceX has already signed with Anthropic and Alphabet's (NASDAQ: GOOGL)(NASDAQ: GOOG) Google, it also gained a third AI compute customer in the form of Reflection AI, which agreed to pay $150 per month starting in July for access to Nvidia (NASDAQ: NVDA) GPUs in SpaceX's Colossus 2 data center.

This reinforces the thesis that the xAI business isn't just a speculative play about building the Grok model into a serious OpenAI and Anthropic competitor, or building data centers in orbit. SpaceX's AI division is quickly becoming a leader in contracted AI compute, with deals already in place that exceed the company's entire 2025 revenue.

Is SpaceX a buying opportunity?

Let's be clear. Even after three consecutive days of declines, SpaceX is far from being a "cheap" stock. Even if we include the three AI compute deals that include nearly $28 billion in annualized revenue not showing up in the results yet, SpaceX still trades for more than 40 times sales and is not yet profitable.

Having said that, if you were hoping to buy shares at the IPO and felt you had missed out, now could certainly be a second chance to start a position. Just keep in mind that this is a richly priced stock that will need significant future revenue growth and profitability to justify the current valuation, and size your position accordingly. And it could be a good idea to build a position incrementally over time, rather than buying shares all at once. A disciplined approach when investing in a stock like SpaceX can be an excellent way to go.

Matt Frankel, CFP® has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

Despite the S&P 500 still trading near all-time highs, there are some excellent long-term opportunities to be found in the stock market. One area in particular where they exist is in the world of dividend stocks. As a group, dividend stocks trade at a significant discount to the overall market, and, thanks to the elevated interest rate environment, yields remain relatively high.

With that in mind, here are two ETFs you can add to your portfolio right now that will allow you to get an excellent combination of steady dividend income, double-digit total return potential, and low volatility. I own both in my portfolio and plan to keep increasing my positions over time.

International stocks are cheap right now

As mentioned, dividend stocks as a group are cheap right now compared to their non-dividend counterparts. But international dividend stocks are even cheaper.

One ETF that could be a smart choice right now is the Vanguard International High Dividend Yield ETF (NASDAQ: VYMI). It tracks an index of about 1,580 dividend stocks across developed and emerging markets, pays a 3.9% dividend yield, and has a low 0.07% expense ratio, which means your investment fees will be just $7 for every $10,000 in assets. (Note: An expense ratio isn't a fee you have to pay. It will simply be reflected in the fund's performance.)

Don't think that just because this is an international dividend ETF that it's full of stocks you've never heard of. Top holdings include Nestle, Toyota, Shell, and several other familiar names.

Consider the valuation case. The average stock owned by the Vanguard International High Dividend Yield ETF trades for 14 times earnings and for 1.7 times book value. For comparison, high-dividend stocks held in the U.S. version of this ETF trade at nearly 22 times earnings and 3.1 times book value. And even that is much less than the S&P 500's average P/E ratio of 28 and price-to-book multiple of 5.5.

Real estate while rates are high

Real estate is one of the most rate-sensitive parts of the market. Now that inflation has surged higher in 2026 and Federal Reserve rate cuts seem to be on hold, at least for now, many real estate investment trusts (REITs) trade for attractive prices.

Image source: Getty Images.

The Vanguard Real Estate ETF (NYSEMKT: VNQ) could be worth a closer look. The ETF, which has a dividend yield of roughly 4%, owns a portfolio of U.S.-based REITs. Top holdings include data center giants Equinix and Digital Realty Trust, as well as American Tower, Prologis, and Welltower.

This can be a great way to add steady, growing income to your portfolio, especially now. The fund's dividend has grown at an annualized rate of about 6.5% over the past three years, and REITs can be among the market's best performers when interest rates finally start to fall once again.

Matt Frankel, CFP® has positions in Digital Realty Trust, Prologis, Vanguard International High Dividend Yield ETF, and Vanguard Real Estate ETF. The Motley Fool has positions in and recommends American Tower, Digital Realty Trust, Equinix, Prologis, and Vanguard Real Estate ETF. The Motley Fool recommends Nestlé. The Motley Fool has a disclosure policy.

SoFi (NASDAQ: SOFI) and PayPal (NASDAQ: PYPL) are two of the most widely followed fintech stocks in the entire market, and both have been beaten down. SoFi has fallen by more than 45% from its 52-week high, despite reporting revenue growth of more than 40% in the latest quarter. PayPal has declined by 47% from its recent peak and is a staggering 86% below its 2021 all-time high, despite strong profitability.

In this article, I'll take a side-by-side look at both of these beaten-down fintech stocks, discuss why each one has been under pressure and the opportunities ahead, and give my honest take on which is the better investment opportunity right now.

SoFi: Incredible momentum, but Wall Street isn't convinced

SoFi's business has been firing on all cylinders for a long time, and it shows no signs of slowing down. In the first quarter, SoFi reported 41% year-over-year revenue growth, 35% growth in members to 14.7 million, and rapidly growing earnings per share.

Image source: Getty Images.

Perhaps most significantly, SoFi's cross-buy rate has steadily increased from 36% to 43% over the past year. This is the percentage of new products (such as checking accounts or credit cards) opened by existing customers, and it is significant for two main reasons. First, it's much cheaper for SoFi to sell a product to an existing customer than to acquire a new one. Second, the more products each of its members has with the bank, the deeper the relationships SoFi has with its customers, creating a "stickier" member base.

In addition, SoFi recently launched the first stablecoin issued by a nationally chartered bank, a development that's definitely worth monitoring.

Of course, SoFi isn't exactly down for no reason. The company kept its full-year guidance steady despite a massive first-quarter earnings beat. Elevated interest rates could hurt demand for loan products. And, the bank completed a dilutive $1.5 billion equity raise earlier this year, despite having no clear need to do so.

SoFi still isn't a cheap stock by most metrics, but it looks far more attractive than it did at the beginning of the year. In fact, with shares trading at 2.04 times book value, SoFi is significantly cheaper than mega-bank JPMorgan Chase (NYSE: JPM), which trades for 2.6 times book -- and certainly isn't growing revenue at a 41% rate.

PayPal is in transition -- again

PayPal's stock is beaten down for a pretty clear reason. Its growth has been anemic (1% adjusted EPS growth in the first quarter), and the company recently replaced its CEO after several years of slow progress. The stock trades for less than eight times earnings right now, so it's essentially priced for no growth.

However, there are some reasons to be optimistic about it. For one thing, the company is doing a solid job of growing its Venmo platform, where the most untapped monetization opportunities arguably lie. Total payment volume on Venmo grew 14% year-over-year in the first quarter, and features like "Pay With Venmo" gained impressive traction.

Second, it's important to emphasize just how profitable PayPal's business is. The company generates about $7 billion in annual free cash flow, and with new CEO Enrique Lores targeting $1.5 billion in cost savings over the next 2-3 years, it could get even more profitable, even with sluggish revenue growth. Plus, PayPal is buying back its own stock hand-over-fist, indicating that management believes the stock is undervalued.

Finally, if PayPal can successfully return its platform to growth, embrace AI opportunities (a big focus for Lores), and keep PayPal's branded checkout as the leading platform, the current price could end up being ridiculously cheap. But those are all big "ifs."

Which is the better buy now?

To be clear, I own both of these stocks in my portfolio, and I think there are compelling reasons to buy both at their current valuations. In my view, SoFi is a misunderstood company actively disrupting a largely outdated industry, while PayPal is a mature payments leader struggling to find its next growth lever.

Both of these stocks could regain their recent highs under the right circumstances. I'd give SoFi the edge when it comes to the better comeback story, mainly because the stock is beaten down for reasons that have little to do with its own business results, but on the other hand, PayPal is certainly a high-quality business to be able to buy for less than eight times earnings.

JPMorgan Chase is an advertising partner of Motley Fool Money. Matt Frankel, CFP® has positions in PayPal and SoFi Technologies and has the following options: long January 2027 $75 calls on PayPal, long January 2027 $95 calls on PayPal, short January 2027 $135 calls on PayPal, and short January 2027 $85 calls on PayPal. The Motley Fool has positions in and recommends JPMorgan Chase and PayPal. The Motley Fool recommends the following options: short June 2026 $50 calls on PayPal. The Motley Fool has a disclosure policy.

Space Exploration Technologies Corp. (NASDAQ: SPCX), better known as SpaceX, has not officially announced when its first earnings report as a public company will be released, but it's likely to come in late July or early August. Several sources have speculated an Aug. 6 earnings release, but this is unconfirmed at this point.

SpaceX has a market capitalization of more than $2.4 trillion as of this writing, and many investors are torn between the sky-high valuation metrics and the stock's long-term growth potential. It's fair to say that, regardless of the exact date, SpaceX's second-quarter earnings could be one of the most anticipated reports of the entire summer.

With that in mind, when SpaceX's earnings are released later this summer, here are the five numbers I'll be most eager to see.

Image source: Getty Images.

1. Starlink subscribers and growth

While the most exciting parts of the growth potential might include things like data centers in space and massive compute deals with companies like Anthropic and Alphabet's (NASDAQ: GOOGL)(NASDAQ: GOOG), the fact is that Starlink is the only profitable part of the company right now.

In SpaceX's S-1, we learned the business had 10.3 million subscribers at the end of the first quarter. Starlink revenue grew 50% year-over-year in 2025 and is arguably the most important component of the bull case (at least in the near term), so I'll be paying close attention to the Starlink portion of the earnings report.

2. Starship progress

This isn't exactly part of the numbers, but I'll be watching for any updates on Starship's path to commercialization.

The S-1 gave a target of orbital payload delivery at some point in the second half of 2026, and the success of Starship is crucial for several areas of the business, including ramping up satellite launches, reducing launch costs (for both SpaceX and its customers), and eventually for the orbital AI computing that's a part of the long-term xAI thesis.

3. xAI revenue and profitability (or lack thereof)

The xAI business was the biggest drag on SpaceX's profits last year, posting a $6.36 billion loss for the full year 2025. But with the Anthropic and Google deals, the entire company's revenue run rate will more than double. I'll be watching to see what that means for xAI's bottom line.

4. AI Capex

SpaceX's AI capex was $7.7 billion in the first quarter, which implies that it would be in the $30 billion ballpark for the full year. This is significantly lower than what other trillion-dollar tech companies are spending. Now that the company is flush with cash (it raised about $85 billion in its IPO), my question is whether AI investment will accelerate or slow down once the Anthropic and Google compute deals are active.

Matt Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

Claiming Social Security too early without considering your overall financial picture is one of the most common mistakes retirees make. This is especially true for retirees under 65 with substantial savings in 401(k) s, IRAs, and other retirement accounts.

There's a strategy that can be highly effective for retirees in this situation, and financial planners often refer to it as the "bridge strategy." Here's how it works and how to tell if it's the best move for you.

Image source: Getty Images.

What is the Social Security bridge strategy?

Let's say that you're 65 years old and just retired. You would be eligible for a $2,300 monthly Social Security benefit if you decided to start collecting it right now. You also have about $1.5 million in retirement accounts.

Now, instead of claiming Social Security, let's say that you decided to simply use your retirement accounts to cover your living expenses for the first five years of your retirement, planning to claim Social Security at age 70 instead.

On one hand, you'd be drawing down your savings a little faster than if you had started collecting Social Security at 65. But on the other hand, your Social Security benefit would grow to nearly $3,300 per month at age 70, giving you about $1,000 per month in additional guaranteed, inflation-protected retirement income. Over a decade, that's a six-figure sum of money.

Here's the short version. The bridge strategy involves living off your retirement savings until you've maxed out your Social Security benefit at age 70.

The benefits can be fantastic

There are several potential benefits of the bridge strategy, beyond the obviously higher monthly Social Security checks you'll get.

For one thing, Roth conversions could make a lot of sense during the bridge period. While you're only living off of your retirement savings, there's a good chance that you'll have significantly lower taxable income (and be in a lower tax bracket) compared to your working years. Strategically converting some money from your tax-deferred IRAs and 401(k)s into Roth accounts can help keep your tax bills lower throughout your retirement. This strategy can also lower your eventual required minimum distributions (RMDs), since RMDs don't apply to money in Roth accounts.

Additionally, if you're married, the bridge strategy of delaying the higher earner's Social Security benefit until 70 also maximizes the survivor benefit that will continue in the event the higher-earning spouse dies first.

One big caveat

In order to ensure the bridge strategy works, it can be a smart idea to liquidate enough of your investments to accumulate at least three years' worth of living expenses in cash in your accounts before you retire.

Think about it this way. Let's say that your portfolio is mostly in stocks (or stock-based investment funds) and the market crashes a couple of years into your retirement. You'll be forced to sell investments at crash-level prices to maintain your bridge strategy. But if you have the money in cash, you don't have to worry about market risk while letting your Social Security benefit grow.

Who should use the bridge strategy?

To be perfectly clear, there is no Social Security claiming age or retirement savings drawdown strategy that is appropriate for everyone. The bridge strategy can be a particularly strong choice for retirees who have sufficient savings to comfortably fund the first few years of retirement, are in relatively good health, and have a reasonable expectation of living into their 80s.

Of course, every situation is different. If you're wondering if the bridge strategy could be a good fit, it's always a smart move to seek the advice of a Certified Financial Planner® or other experienced professional who can assess your entire financial situation.

The Motley Fool has a disclosure policy.