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

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

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

Image source: Getty Images.

Nothing will change

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

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

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

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

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

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

Image source: Getty Images.

Own inflation beneficiaries

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

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

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

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

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

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

Ford Motor Company's (NYSE: F) shares have been in the fast lane. Over the past 12 months, they have climbed 21% (as of Sept. 3). Surprisingly, this performance is ahead of four of the "Magnificent Seven" stocks, high-powered companies sitting in the middle of impactful technological trends.

Investors aren't used to this automotive stock putting up strong returns. In the past five years, Ford's share price increased by just 9%. But can the business do a better job at rewarding its investors over the coming half-decade?

Here's where I believe Ford stock will be in five years.

Image source: The Motley Fool.

Things will stay the same

At a high level, Ford's operations aren't going to change much going forward. Known for its pickup trucks and SUVs, the company will remain a leading player in this segment of the automotive industry. Its Ford Blue segment will remain the most important financial driver. This division reported revenue of $26.1 billion in the second quarter, representing 54% of the company's total.

There's also the Ford Pro segment, which sells vehicles, software, and services to commercial and government clients. It's more profitable than traditional car sales and offers greater growth potential. Perhaps most importantly, it brings in a recurring revenue stream from subscriptions.

The company's bulls will point to the recent announcement of the Ford energy segment. This division plans to sell battery storage systems to commercial and industrial customers. Given the substantial demand for these solutions, driven by the data center boom, the business is positioning itself at the center of a notable growth trend.

The good news is that this move leverages assets from the restructured electric vehicle (EV) operations. In December last year, Ford announced a significant $19.5 billion special charge to pull back its EV investments due to softer-than-expected demand. It's now hoping to monetize these capabilities with the energy segment.

The bad news is that Ford energy, no matter how much excitement it adds to the Ford story, isn't likely to move the financial needle much. According to Morgan Stanley, Ford Energy is projected to bring in $550 million (at the midpoint) in operating income once it reaches full scale. This represents a trivial 5% of the $10.5 billion in adjusted operating income that the overall business is expected to report in 2026.

Ford isn't set up to post market-beating returns

Ford's operations aren't going to change. Therefore, investors shouldn't expect the business to suddenly become a market-beating investment opportunity. The company isn't set up to produce outsize returns.

First off, the mass-market auto industry isn't supportive of strong growth. In the U.S., the same number of passenger cars were sold in the month of July compared to 40 years ago, making it a very mature market.

Ford's demand can also be highly cyclical. New cars are typically the second-largest purchase consumers make in their lives. When the economy is down, people will delay buying a vehicle. Ford's already razor-thin profit margins add financial risk when macro forces shift.

And the capital expenditures are meaningful. Ford must continually invest additional resources in the business just to maintain its position in the industry. The reward for this is minimal growth.

Investors can find the best opportunities in the compounding machines. These companies can consistently grow their revenues and profits at healthy rates over the long term. They possess durable competitive strengths. And they don't experience much cyclicality.

Ford will never be in this category. In five years, I think the best-case scenario is that the stock appreciates by 50%, which is admittedly a low-probability outcome. Because shares trade at a forward price-to-earnings ratio of just 7.4, upside can come from multiple expansion. Of course, improving market sentiment is not a sure thing.

Neil Patel 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) recently announced results that crushed Wall Street estimates. Its sales surged 106% year over year to $96.2 billion. Diluted earnings per share were up by an even better 128%.

It looks like the leading artificial intelligence (AI) business can do no wrong. Momentum continues to be on its side. Nvidia has possibly been the biggest winner in the ongoing AI infrastructure build-out.

And it shows, as shares have jumped 920% in five years (as of Sept. 3). This company has established itself as the world's most valuable enterprise.

But what's surprising to learn is that the AI stock isn't expensive. It trades at a forward price-to-earnings (P/E) ratio of 24.2. Based strictly on the jaw-dropping financial results this business keeps reporting, it's easy to argue that shares should command double the current valuation multiple.

Is the market warning investors about what's to come?

Image source: The Motley Fool.

AI to the moon

By any metric, AI usage is showing no sign of slowing. The number of tokens processed by Alphabet model APIs, for example, totaled 22 billion per minute last quarter. This was up from 16 billion three months before.

OpenAI and Anthropic, the two prominent AI labs that are planning for trillion-dollar initial public offerings in the near future, are posting skyrocketing revenue figures. And they have rapidly expanding user bases.

Amazon Web Services, Microsoft Azure, and Google Cloud are major hyperscalers that continue to reveal gargantuan customer order amounts with each passing quarter. As of June 30, they had a combined $1.7 trillion in cloud backlogs.

Consequently, the spending isn't letting up. Colette Kress, Nvidia's chief financial officer, estimates that hyperscaler capital expenditures (capex) will come in at $1.3 trillion in 2027. And before the end of the decade, management believes annual AI infrastructure spending will be between $3 trillion and $4 trillion.

All of this demand directly flows to the impressive financial metrics coming from Nvidia. It sells the powerful data center graphics processing units (GPUs) that support AI model training and inference.

On the recent Q2 2027 earnings call, Kress noted that the company expects 70% revenue growth in fiscal 2028. Assuming consensus estimates hold up and Nvidia's margin profile doesn't change, this outlook implies that the business will report a whopping $461 billion in operating income next fiscal year. This would be well ahead of anyone else.

Durability of demand is the trillion-dollar question

All of this information should make every investor extremely bullish about Nvidia's prospects. However, the market is concerned about the durability of Nvidia's growth. The forward P/E ratio of 24.2 demonstrates this.

No matter how smart the experts might sound, no one has any idea how long the AI boom will last. While the robust demand trends and ballooning capex numbers are optimistic data points, things could change quickly.

Maybe the enterprises that are driving usage don't realize the tangible benefits they were hoping for, prompting these customers to cut their AI-related budgets. There's a material probability that meaningful returns come later than the bulls hope, creating a timing gap (and potential bubble bursting) that calls into question how long the sizable capex can continue.

That would have a ripple effect up the value chain. If there's any evidence that AI spending is going to slow, sell-side analysts will be forced to lower their profit estimates for Nvidia. And the share price could drop.

Watching Nvidia's meteoric rise has been very exciting. AI can truly be a game-changing technology.

However, this is uncharted territory. And Nvidia's success rides on the music not stopping, not to mention its ability to fend off rivals developing more advanced chips.

Just like the industry is starved for Nvidia GPUs, the market has an unquenchable thirst for certainty. This is exactly why the company's quarterly results are so closely watched to ensure the growth story is alive. Trillions of dollars are on the line.

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

Target (NYSE: TGT) stock has been on an epic run. Over the past 12 months, the share price has skyrocketed 79% (as of Sept. 3). This performance is certainly better than anyone could have hoped.

Credit goes to the company's turnaround efforts under CEO Michael Fiddelke, who took over from Brian Cornell in February. Target has improved merchandising, remodeled stores to upgrade the guest experience, and leaned into digital efforts. It has exceeded Wall Street earnings estimates in each of the last four quarters.

This retail stock currently trades at about $165 per share, a price it hasn't seen since the first half of 2024. But it's still 38% below its peak from November 2021.

Investors might rush to hop on the Target bandwagon. Here's why it's best to pause.

Image source: The Motley Fool.

Market sentiment has improved dramatically. Consequently, prospective investors have to deal with a stock price embedded with much higher expectations today.

As of this writing, Target shares sport a price-to-earnings ratio of 17.1. This multiple has risen by 59% in the past year. Shareholders have benefited primarily from valuation expansion.

The good times can continue for Target stock much longer than any rational observer would anticipate. However, I believe there is no longer any margin of safety for investors who are seeking to buy shares right now. It appears as though the easy gains have already occurred.

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

If it's strong capital appreciation that you're after, then Procter & Gamble (NYSE: PG) isn't the best investment candidate. Its shares are up just 67% in the past decade (as of Sept. 3), drastically underperforming the S&P 500 index.

But if you're seeking a blue chip dividend stock, then Procter & Gamble is hard to beat. Its dividend yield of nearly 3% is almost triple the benchmark average.

Here's how many shares of this company you'd need for $15,000 in yearly dividends.

Image source: The Motley Fool.

Procter & Gamble currently pays an annual dividend of about $4.34 per share. This means you would have to own 3,456 shares to generate $15,000 in yearly passive income. Based on the stock price of $147.51, investors would be required to pay $510,000 to buy enough shares.

The company's commitment to its shareholders is incredible. Procter & Gamble has increased its dividend payout for 70 straight years. Any business that has at least 50 years of raises is considered a Dividend King. What's more, the company has paid a dividend for 136 straight years.

Investors seeking a steady and predictable income stream have come to the right place. Procter & Gamble's strong competitive position, sizable profits, and history of successfully navigating any adverse developments make it a safe holding.

Neil Patel 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.

Amazon (NASDAQ: AMZN) is an exceptional business. It has a strong presence in multiple massive, high-growth industries. Its $2.7 trillion market capitalization makes it one of the most valuable companies on Earth.

However, the shares have disappointed investors. They are up 47% in the trailing five-year period (as of Sept. 2), significantly underperforming the S&P 500 index. They also trade 10% below their all-time record, which was established about a month ago in early August.

This setup looks like a good opportunity for investors to buy a stake in the "Magnificent Seven" stock. Here's what I predict a $10,000 allocation made at a 10% discount today will be worth in 10 years.

Image source: The Motley Fool.

Massive scale is an inhibiting factor to consider

In the past decade, Amazon's stock price has climbed 561%. During this time, net sales soared 560%. The top line went from $30.4 billion in second-quarter 2016 to a whopping $200.6 billion in the most recent quarter (ended June 30). This business has been one of the most impressive success stories in history.

Given that it's a colossal enterprise these days, however, I think it would be silly for investors to expect a similar type of return between now and September 2036. Sell-side analysts hold a consensus view that revenue will reach $828.3 billion in 2026. Amazon passed Walmart last year to hold the title of having the highest sales figure.

I still believe the stock has what it takes to beat the market in the next 10 years. I predict that Amazon shares will rise 300% during that time, turning $10,000 into $40,000.

Amazon's revenue gains surely aren't going to exceed 20% annually in the future. After all, it won't be long until yearly sales start to top a staggering $1 trillion.

However, its focus on operating leverage and taking advantage of its scale will be key. As a result, the most critical driving force for the stock will be earnings growth.

From 2025 to 2028, Amazon's revenue will increase by 53%, according to consensus expectations. Its diluted earnings per share, on the other hand, are forecast to climb at a much faster rate of 86%. It's reasonable to think that this trend of the bottom line outpacing sales will hold up in the future.

Investors should also consider the stock's valuation. It trades at an enterprise value-to-earnings before interest and taxes (EBIT) ratio of 29.2 right now. This is inexpensive from a historical perspective. It's anyone's guess what multiple shares will trade at in 10 years. However, the current entry point is intriguing and adds potential upside.

Amazon is a business that belongs in your portfolio

Just because Amazon's return potential in the coming decade most likely won't mimic what was achieved in the last 10 years, it doesn't mean investors should completely disregard the business. This is still an exciting growth story. In fact, Amazon continues to be a very compelling opportunity for those seeking exposure to some powerful technological trends.

The company dominates online shopping, thanks to its expansive ecosystem and well-oiled logistics system. Consumers benefit from a top-notch user experience, low prices, and fast/free shipping. In the U.S., 40% of all e-commerce spending goes through the Amazon marketplace.

Digital advertising has quickly become a major contributor to financial performance. Through the first six months of 2026, the company collected $37 billion in ad sales. This figure rose by 25% compared to the same period last year.

Amazon is able to lean on the popularity of its e-commerce site. Understanding shopper intent, it displays targeted ads that can be monetized.

The most important segment in the coming decade might be Amazon Web Services, which accounted for 21% of the business's entire revenue base in Q2, while representing 60% of total operating income. Growth accelerated in recent quarters on the back of heightened demand for cloud services and artificial intelligence capabilities.

Investors will want to take advantage of Amazon's 10% dip and acquire shares today. This is a business that belongs in a long-term portfolio.

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

Identifying high-quality businesses that send investors cash every single quarter is a great way to allocate your capital.

Instead of always chasing the popular growth stocks, definitely an exciting game to play, perhaps it's time to focus part of the portfolio on an income-generating strategy. Most investors are without a doubt familiar with one of the top companies that can satisfy this requirement.

If you invest $10,000 in this blue chip dividend stock, you will be able to collect a passive income stream of $241 per year from the nearly 114 shares that you'd own. And that windfall is going to grow consistently in the future.

Image source: Getty Images.

Rising payouts quench shareholders' thirst for income

The business that can make you $241 with a $10,000 capital outlay is none other than Coca-Cola (NYSE: KO). The quarterly payout is $0.53. And it pays a dividend yield of 2.41%. That's more than double the S&P 500 index.

The most impressive statistic is the company's still active streak. Coca-Cola has now increased its dividend payout in a mind-boggling 64 straight years. This makes it a Dividend King, a list of businesses that have at least a 50-year streak going.

Berkshire Hathaway is the clearest example of what patience can result in over decades. The conglomerate, under the leadership of Warren Buffett, acquired its last share in the soft drinks business in 1994. The total cost basis was $1.3 billion.

Fast forward to 2026. That position is currently valued at $35 billion. But the best part is that the Coca-Cola holding brings in more than $840 million in annualized passive income for the Omaha-based firm.

Investors can bank on the beverage giant staying committed to raising the payout in the future. In the past decade, the quarterly dividend grew by 51%. Assuming the next 10 years bring a similar gain, investors will make $364 annually on that same $10,000 starting sum, translating to a hefty yield of 3.64% on the initial cost basis. This is what patience can get you.

This beverage stock's durability is its best attribute

It's no shock that in recent years, most of the market's attention has gravitated to companies in the artificial intelligence (AI) industry, whether this includes well-funded start-ups or trillion-dollar behemoths. But I don't think investors can confidently predict what these businesses will look like in five years. Most of these start-ups might not even exist a decade from now. That's how rapidly things are changing. This constant shift introduces tremendous uncertainty.

Coca-Cola stands out precisely because it's a boring and durable company. Investors don't need to lose sleep over the possibility that it will be disrupted anytime soon. This can't be said about most businesses.

This beverage stock has been a sizable holding for Berkshire Hathaway for quite some time. Yes, it brings in a meaningful passive income stream compared to the cost basis. However, Warren Buffett and his successor, Greg Abel, surely appreciate just how wonderful this business is.

The brand can't be overlooked. Supported by a global presence, impactful marketing, and product consistency, consumers have come to love Coca-Cola. These beverages drive repeat purchase behavior. And this aids in ongoing pricing power.

The company consistently reports outstanding profits that fund dividend activity. In the most recent quarter, it posted an excellent operating margin of 34.9%. As a result, it brings in sizable free cash flow, which is expected to total $12.4 billion this fiscal year.

There is obviously no sure thing in the stock market. However, it's as close to a virtual certainty as possible that Coca-Cola will still be dominating its industry decades from now. And investors can rely on the company to keep paying a steadily rising income stream. That's what the long track record suggests.

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

Uber (NYSE: UBER) just made headlines, announcing that it's going to trim 10% of its staff. The goal with this move is to reduce management layers and focus more on the core business.

Shares have still been on a very disappointing run. They're down 18% in the past 12 months (as of Sept. 3). And they currently trade 24% off their record from October last year. Investors have the chance to be opportunistic with an industry-leading enterprise.

I think better days are coming. I'm confident this growth stock will rise at a 19% compound annual rate to double by 2030. Here's the key reason I'm so sure.

Image source: Getty Images.

Watch the bottom line

It wasn't that long ago that Uber was losing wild amounts of money. While this is undoubtedly an extremely innovative and disruptive company, critics questioned the sustainability of the business model.

Thanks to Dara Khosrowshahi's operational prowess, Uber evolved into a financial powerhouse. In 2025, it registered adjusted net income of $5.2 billion, up 32% year over year. This company runs a scalable platform that benefits from operating leverage, a situation in which earnings rise faster than sales.

Adding to that, I think profit growth will be the most important catalyst pushing the stock to a 100% gain in the coming four years. This implies that earnings per share will climb at a compound annual rate of 19%. This is a realistic outcome.

The bottom line's trajectory is obviously supported by revenue growth. Even though its mobility and delivery operations seem ubiquitous, notable gains continue. During the second quarter, sales were up 12%. This was driven by the monthly active user base expanding by 16% and gross bookings increasing 24%.

According to consensus analyst estimates, Uber's revenue is projected to grow at an annualized clip of 14% from 2025 to 2028. It's likely the double-digit gains will continue even after this forecast period. This trend should result in profits soaring.

"In the short run, the stock market is a voting machine," Ben Graham once wrote. "But in the long run, it is a weighing machine." Market sentiment rules the narrative in the near term. What matters over time, however, is a company's ability to grow its earnings power. Uber is well positioned to do just that.

Now is a good time to buy the dip

Uber shares have gone in reverse. As mentioned, they're trading 24% below their peak. This business looks like a prime buy-the-dip candidate right now.

The valuation further supports upside. Investors can currently buy the stock at a forward price-to-earnings ratio of 17.2. For the sake of comparison, the S&P 500 index carries a forward multiple of 21.1. Uber trades at almost a 20% discount to the overall market.

This gap, while attractive to prospective investors, isn't warranted. From a fundamental perspective, Uber is in a strong position. It has a powerful network effect that supports a durable competitive standing that's constantly improving. Revenue growth is healthy. And profitability has rapidly expanded.

But the market is focused intensely on the uncertainty that comes from autonomous vehicle (AV) technology. This poses a threat to Uber's entire business model, as the leading AV enterprises can quickly scale their user-facing platforms and find broad adoption. This is the most important tail risk that investors need to monitor.

There doesn't appear to be a reason to worry. Uber is making strategic investments and striking valuable partnerships to increase the probability that it is a key player in the AV wave, leaning on the fact that it controls demand with its massive user base.

Additionally, Khosrowshahi is convinced that human drivers will still be needed in a future that sees rising AV adoption. When demand for rides fluctuates wildly based on the time of day or week, a hybrid mobility ecosystem makes the most sense.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

Coca-Cola (NYSE: KO) has been crushing the overall market in 2026. As of Sept. 3, shares have climbed 26%. This performance is, surprisingly, ahead of all the "Magnificent Seven" stocks.

But the beverage stock's impressive gains isn't why it's in portfolios. Instead, it's because the business is highly regarded among passive income investors. The track record speaks for itself.

Here's how many Coca-Cola shares you'd need to bring in $40,000 in yearly dividends.

Image source: The Motley Fool.

In February, the company's board of directors increased the quarterly dividend by 4% to $0.53. This was the 64th straight year that Coca-Cola implemented a payout hike. This makes it a Dividend King, a company that has raised its annual dividend payout for at least 50 consecutive years.

Each share pays $2.12 on an annualized basis. So investors would need to own 18,868 shares to generate $40,000 in annual dividends. Based on Coca-Cola's current stock price of $88.24, this amounts to an initial capital investment of nearly $1.7 million.

Coca-Cola's unbelievable streak highlights the leadership team's commitment to its shareholder base. Investors can have full confidence that the $40,000 yearly income stream will grow steadily. In the last decade, for instance, the quarterly dividend rose by 51%. Given the company's robust competitive position and huge profits, there's no reason its believe the prosperity won't endure.

Neil Patel 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.

Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) shares have risen by 236% over the past decade (as of Sept. 2). Critics are quick to point out that this performance came in lower than the total return of the S&P 500 index. It's easy to question the conglomerate's capital allocation decisions.

However, over the past six decades, Berkshire Hathaway's stock price has compounded at an annualized rate of 19.7%. This trounces the S&P 500 index's 10.5% average annual total return. The company's long-term track record is so extraordinary that even if the Omaha firm's shares fell by 99% tomorrow, they still would have beaten the benchmark over the trailing-60-year period.

Warren Buffett deserves all the praise. His successor, Greg Abel, is now tasked with directing capital allocation decisions for the massive $1.1 trillion enterprise. Investors hope that Berkshire Hathaway shares will outperform the S&P 500 index in the coming decades.

Here's the one stock that could help continue the streak under the new CEO.

Image source: The Motley Fool.

Apple remains Berkshire Hathaway's largest public equity holding

Berkshire Hathaway first purchased Apple shares in the first quarter of 2016. Since the start of that year, the consumer technology giant's shares have climbed an astonishing 1,140%. At one point, this single business represented about half of the conglomerate's entire portfolio. Apple might just be the single-most successful investment Warren Buffett made based purely in terms of dollar-figure gains.

Starting in late 2023, the Apple holding has been trimmed considerably. But it remains the biggest position, accounting for more than 20% of Berkshire Hathaway's portfolio, which is currently valued at $73.8 billion. Based strictly on this size, Apple is the one holding that can actually have the most notable impact on Greg Abel's ability to beat the market.

The valuation can definitely be a concerning factor. Apple shares trade at a price-to-earnings ratio of 37.2. The stock has gotten slightly more expensive this year, up 19% in 2026. It's safe to say the current valuation leaves no margin of safety.

But there are valid reasons why this is an elite business, a perspective that can drive market sentiment and still introduce the possibility that the stock can produce winning returns. Nothing is guaranteed, though.

Apple possesses arguably the world's most valuable brand. It benefits from pricing power and customer loyalty. The powerful ecosystem keeps users locked in, supporting its competitive position.

And the financials are stellar. Apple's growth has picked up, thanks to strong demand for the iPhone 17 family, with revenue increasing by 16.2% year over year through the first nine months of fiscal 2026 (ended June 27). Profits are incredible, and free cash flow remains robust.

The odds aren't stacked in Greg Abel's favor

Interestingly, Apple also welcomed a new CEO. John Ternus, a company veteran, just replaced Tim Cook, who led the business during a wildly successful run that saw the "Magnificent Seven" stock soar more than 2,200% over his 15-year tenure.

Ternus has big shoes to fill. This is also true of Abel, who I believe faces an uphill battle to achieve market outperformance.

It all comes down to scale. Berkshire Hathaway is one of the most valuable companies on the planet. Growing its intrinsic value by 20% per year simply might not be possible. It was much easier to accomplish this feat when the business was a lot smaller.

Size can be an inhibiting factor to growth. This also shows up elsewhere.

As of June 30, Berkshire Hathaway had $365.5 billion in cash and short-term Treasuries on its balance sheet, equal to 34% of the company's market capitalization. There aren't enough investment candidates that are meaningful enough to move the needle. No one knows if or when the opportunities will start to flow.

The cash gives Berkshire Hathaway an invaluable financial buffer that insulates it from adverse market and economic developments. However, that cash will continue to be a drag on performance.

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

The entire cryptocurrency market is worth $2.6 trillion (as of Sept. 2). This is slightly lower than the valuation of Amazon, one of the world's most dominant businesses.

Despite its size, the crypto industry is still considered a very risky place for investors to allocate capital. While it's never a good idea to concentrate too heavily in one particular corner of the market, curious investors should still think about the best ways to gain digital asset exposure in their portfolios.

Even a relatively small sum of $1,000 is a good place to start. With this money, here's the top cryptocurrency to consider buying right now.

Image source: Getty Images.

Steady hands eventually see the light at the end of the tunnel

I believe it's a smart idea to keep things as simple as possible. In the cryptocurrency market, this will lead you toward Bitcoin (CRYPTO: BTC). With its first block being mined in January 2009, this is the oldest digital asset.

It's also the most valuable. Bitcoin's market cap of $1.5 trillion represents almost 60% of the overall cryptocurrency industry.

After hitting a peak price of about $126,000 last October, Bitcoin has been navigating a notable downturn, trading 36% below that record. But it has bounced back in the past couple of weeks, rising 26% since Aug. 19.

History says that these bear markets, while extremely stressful to live through, are normal. During the past 10 years, Bitcoin's price has tanked at least 50% on four different occasions. Every single time, it came roaring back to establish a fresh all-time high.

This means that for investors to capture winning returns, they must be able to stomach the volatility. This is the price of admission. It separates the patient and disciplined Bitcoin "hodlers" (crypto lingo for holders) from the weak-handed market participants.

Bitcoin's price tend to follow a four-year cycle. Its bull-market tops occur roughly every four years. Its bear-market bottoms happen about every four years as well. What this trend reveals is that Bitcoin could hit a low late this year or in early 2027. Then, it will start climbing to reach a new record toward the end of 2029.

Capital will continue to flow to a fixed-supply asset

When the Bitcoin whitepaper defining the crypto was released in October 2008, it was held out as a true innovation. This technology enabled, for the first time ever, one party to send value to another party anywhere in the world without the need for an intermediary. The only requirement was access to the internet.

This breakthrough supports the bullish view that Bitcoin's ultimate purpose is to become a medium of exchange. In other words, the cryptocurrency's most vocal supporters think that it will be used more widely as a method of payment in everyday transactions. This is Bitcoin's true north, the thinking goes.

To be clear, though, this is still a long way off. The leading payment networks, credit cards, and physical cash still dominate. They come together to create a robust network effect that will be hard to topple. It's not impossible, but Bitcoin's financial infrastructure needs to keep developing. Individuals must also be incentivized to transact with this digital asset.

Therefore, for the next five years and beyond at least, Bitcoin's investment thesis rests solely on it becoming more broadly adopted as a store of value and financial asset that any stakeholder group -- individuals, corporations, institutional asset managers, or governments -- will want to allocate some of their savings to with a long-term time horizon.

Despite its volatility, Bitcoin has done nothing except raise the purchasing power of its investors over time. During the past decade, its price has skyrocketed about 15,000%, appreciation that is a result of its fixed supply, decentralization, and security.

I believe a $1,000 investment in Bitcoin today will be worth a lot more in the future.

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

Investors are familiar with the truism that putting money in the stock market is the best way for most people to amass long-term wealth. For instance, the S&P 500 index (SNPINDEX: ^GSPC) generated a total return of 1,910% over the past 30 years (as of Sept. 2), growing a starting capital sum nearly 21-fold during that stretch. The numbers are clear.

But investors might have questions about the best time to allocate savings to the S&P 500 index. This is a pressing matter today, since the benchmark has climbed 100% since the start of 2023. Some pundits are saying that a crash is coming in the not-too-distant future. This can lead to fear, uncertainty, and doubt (FUD).

Should you invest in the stock market right now? History offers a clear answer.

Image source: Getty Images.

You can still make money if you buy high

At recent prices, the S&P 500 index is trading 2% below its peak, which was reached in August. This gives prospective investors an opportunity to buy a related exchange-traded fund (ETF), like the Vanguard S&P 500 ETF, while it's on a small dip.

Many people try to guess when the market is going to fall and invest before it starts to rise again. Buy low and sell high, as the saying goes. But picking the right moment is virtually impossible without getting extremely lucky, and those who try often miss out on gains while they're waiting. This is why analysts often say timing the market is a losing activity.

The good news is that investors can make money even if they buy high. According to research compiled by Bank of New York Mellon, if you invested in the S&P 500 while it was at an all-time high, you generated an average return of 9.7% over the following year. Extending that time horizon, the average annualized return was 8.6% over the subsequent five years. Those returns are lower when the market was not at an all-time high. This is extremely encouraging for investors who feel like they've missed the boat by watching the S&P 500 index's rise from the sidelines.

The FUD mentioned earlier is warranted, though. The macroeconomic backdrop is being defined by the unknown path of inflation and interest rates and how the Kevin Warsh-led Federal Reserve will handle things. The stock market, driven by the ongoing artificial intelligence boom, is at a historically elevated valuation.

It seems like the rational move is to wait until a bear-market crash arrives. At that point, you can be aggressive and start investing. The only problem with this approach is that stocks can keep rising before a downturn happens, and you could end up buying in at higher prices compared to where they trade today.

Dollar-cost averaging is a simple and effective strategy

Successful investing does not depend on figuring out if now is a good time to put money to work. Favorable outcomes are achieved by making investing a consistent habit that's done over many decades, not a single event. Patience is rewarded, as history shows.

This is why dollar-cost averaging (DCA) is the best methodology to adopt when investing in the stock market. Allocating small amounts of money every month is an extremely effective way to build wealth. The data backs this up.

A $10,000 investment in the Vanguard S&P 500 ETF, earning a 10% annualized total return, would grow to $174,500 after 30 years. Investing an additional $100 every month during this same period of time would result in an ending balance of $381,800. Consistency adds up, like a snowball effect.

The best part of a DCA strategy might not have anything to do with the numbers. Those who choose this option don't have to spend one second trying to assess if they should invest right now or wait, as they are buyers in any market environment. It's a hassle-free, automated, and proven approach.

Neil Patel 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.

Starting in the fourth quarter of 2022, Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) became a net seller of stocks. This trend continued in every single quarter through the first quarter of this year. Greg Abel started his first three months as CEO maintaining what his predecessor, Warren Buffett, did.

But things changed in Q2, as the conglomerate bought $23.5 billion worth of stocks and sold $3.7 billion, becoming a net buyer for the first time in more than three years. During the first six months of 2026, Berkshire Hathaway cumulatively purchased $39.4 billion in equities and sold $27.8 billion. This was up dramatically from the $7.1 billion acquired (and $11.6 billion sold) in the same period last year.

Here's what Abel's been adding to the conglomerate's portfolio. Will he keep being aggressive going forward?

Image source: Getty Images.

Berkshire is making some big moves

In the first half of 2026, Berkshire Hathaway trimmed its positions in Bank of America. It also reduced share ownership in Capital One and Kroger. These were the largest sell decisions.

The Omaha company's most notable purchase was Alphabet. Among both Class A and Class C shares, Berkshire Hathaway has made the internet enterprise the third-largest position in the entire portfolio.

It also added to Delta Air Lines, among other businesses.

As of Sept. 1, Berkshire Hathaway's public equities book was valued at almost $360 billion. This is a massive sum that's worth more than most companies out there.

So much cash, not enough opportunities

Berkshire Hathaway shareholders will definitely be encouraged by Abel's net buying spree through the first six months. It might be an early indication that the company is going to be more aggressive in allocating capital to public equities.

During the first six months of 2026, when Abel was a net buyer of stocks, the S&P 500 index traded at an average cyclically adjusted price-to-earnings ratio of 39.2. This was a 9.5% premium to the multiple over the first half of 2025. He's playing offense even though the overall market has gotten more expensive.

However, it's clear that the conglomerate's main problem hasn't gone away. Berkshire Hathaway continues to have way more cash than it knows what to do with. As of June 30, it had $365.5 billion in cash and Treasuries on the balance sheet. There will need to be plenty of sizable opportunities out there for this money to be allocated.

Abel has to deal with the issue of finding worthy investing candidates in a frothy market environment. It will be interesting to see if he remains a net buyer going forward.

Bank of America is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool recommends Capital One Financial, Delta Air Lines, and Kroger. The Motley Fool has a disclosure policy.

Bitcoin has bounced back in the past couple of weeks. Since Aug. 19, the world's most valuable digital asset has seen its price surge 21% (as of Sept. 1). The bulls have been waiting for some positive momentum, as Bitcoin was trading below $70,000 for about two and a half months.

U.S.-based investors that want exposure to the top cryptocurrency in an accessible, convenient, and regulatory-compliant way can pick between the many different spot exchange-traded funds (ETFs). But how do you choose just one from this long list?

I believe the iShares Bitcoin Trust (NASDAQ: IBIT) is the best choice. Here's why.

Image source: Getty Images.

The iShares Bitcoin Trust has $61 billion in net assets

The first reason this is the leading option is that it's by far the largest spot Bitcoin ETF out there. As of Sept. 1, the iShares Bitcoin Trust had $61.4 billion in net assets. This huge sum puts it significantly ahead of the next biggest ETF, which is the Fidelity Wise Origin Bitcoin Fund, which has less than 25% of the net assets compared to its rival. The market is clearly voting, as indicated by where it's directing its capital, that the iShares Bitcoin Trust is the best Bitcoin ETF.

In nine of the past 10 days, billions of dollars have flowed into spot Bitcoin ETFs. Of that figure, the vast majority went to the iShares Bitcoin Trust. This trend will support this investment vehicle's position at the top of the industry.

Higher assets under management (AUM) translate to more liquidity, which results in tighter trading spreads. For example, the iShares Bitcoin Trust saw trading volume of more than 42 million shares on Aug. 31, equal to $1.9 billion. This can be extremely valuable to certain market participants.

Long-term investors who have no interest in moving in and out of positions and who adopt a buy-and-hold strategy will also appreciate the iShares Bitcoin Trust's scale. It makes sense that ETFs with much smaller AUMs face a greater risk of closure, as capital outflows can have a more pronounced negative impact on the investment manager's ability to keep operating. In a worst-case scenario, your position in these kinds of ETFs can be sold off at unfavorable times.

With the iShares Bitcoin Trust, this isn't a concern. As mentioned, its net asset base sits at $61.4 billion. After the Bitcoin treasury company Strategy, with about $65 billion in the crypto, this is the largest Bitcoin holder in the world. That scale and liquidity also mean that this ETF tightly tracks the price of Bitcoin.

The 0.25% expense ratio is compelling

When looking at ETFs to buy, one of the most important variables to look at is the cost. The iShares Bitcoin Trust carries an expense ratio of 0.25%. Let's say you invest $10,000. During the first year, roughly $25 goes to BlackRock, which is the huge asset manager that offers this ETF. This money goes toward covering the firm's operating expenses.

It's worth noting that the iShares Bitcoin Trust is not the cheapest option. For instance, the Morgan Stanley Bitcoin Trust is cheaper, with an expense ratio of 0.14%. Among the U.S. spot Bitcoin ETFs, the iShares Bitcoin Trust is one of the more expensive ones.

This isn't necessarily a bad thing. What you pay for is the certainty of owning an ETF sponsored by a reputable asset management company, such as BlackRock. In total, it has $15.3 trillion in AUM across its different products.

This makes it a favorite among institutional investors. The iShares Bitcoin Trust has a prominent ownership base. JPMorgan Chase, Mubadala Investment Company, and Brevan Howard Capital Management make up some of the top holders. You can bet that these well-known firms have done their homework and have come to the conclusion that this ETF is the best choice.

Individual investors looking to gain immediate Bitcoin exposure might want to consider adopting a similar stance.

JPMorgan Chase is an advertising partner of Motley Fool Money. Neil Patel has positions in Strategy and iShares Bitcoin Trust. The Motley Fool has positions in and recommends Bitcoin, BlackRock, JPMorgan Chase, and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.

In an industry dominated by global money-center financial institutions, SoFi Technologies (NASDAQ: SOFI) keeps proving to investors that it has successfully carved out a niche. The online bank's momentum isn't letting up, despite the uncertain macroeconomic environment.

It reported adjusted net revenue of $1.2 billion during the second quarter, up 40% year over year. And for all of 2026, management expects this top-line figure to be 32% to 35% higher than in 2025.

This flourishing business continues to maintain its impressive growth trajectory. But what has to happen next for the fintech stock's price, which is down 30% in 12 months (as of Sept. 2), to follow?

Image source: Getty Images.

Financial results are the envy of the industry

Shareholders have every right to be upset that the stock hasn't done well during the past year. The fundamentals have been very encouraging, so there is a disconnect between the market's perception and how the actual company is faring.

SoFi's top line has been buoyed by a budding customer base. The business now has 15.8 million customers, rising almost 16% from the end of 2025. These younger and more affluent individuals come to SoFi's platform because of its compelling product and service offerings. They also appreciate the tech-enhanced user experience.

Over time, the company's ability to cross-sell to its customers is enhanced. This drives stickiness, meaning customers are reluctant to face the inconvenience of taking their business elsewhere. And it increases the lifetime value of its client base, supporting a competitive advantage.

Revenue growth has translated into superb profit gains as well. It wasn't that long ago when SoFi was consistently losing money each quarter. However, the digital banking powerhouse has evolved into a highly profitable business.

Adjusted net income jumped 65% year over year to $160 million in Q2, lifted by operating leverage that comes from greater scale. The leadership team believes that adjusted earnings per share will rise between 38% and 42% from 2025 to 2028.

Controlling risk will win over the investment community

SoFi shares reached their all-time high in November 2025. In the three years leading up to this peak, they soared 441%. The stock has taken a beating since, as it now trades 45% off that record. This disappointing performance has happened even though the company is still firing on all cylinders.

The market is clearly concerned about something. In my view, I believe it's a risk factor that isn't specific to SoFi, but something all banking entities have to deal with: credit risk.

SoFi has been growing in remarkable fashion. Every investor loves to see it. However, with rapid expansion comes heightened risk that lending standards are being loosened to satisfy the robust demand from borrowers.

Personal loan originations totaled $10.7 billion during the second quarter, up 54% year over year and accounting for 72% of the total. These products represent the biggest loan category on the balance sheet. They are riskier loans to make that carry high monthly payments, raising the chances that borrowers will run into trouble should economic conditions deteriorate.

I believe this is what investors are worried about. Missed payments can eventually lead to loan losses. This would directly hit SoFi's income statement.

On the other hand, though, approving more personal loans is a rational strategy for the management team to embark on. SoFi ended Q2 with $45.5 billion in deposits. This gives it a low-cost and stable source of funding that it can lend out to borrowers, earning net interest income in the process.

And these loans have been performing well. "Excluding the impact of delinquent loan sales, the estimated all-in annualized net charge-off rate was 3.7%," Chief Financial Officer Chris Lapointe said on the Q2 2026 earnings call.

For the stock price to steadily rise in the hopes of reaching a new record, all SoFi needs to do is continue reporting stellar financial metrics. With each quarter of upbeat results, the market's confidence in the business will grow.

Neil Patel 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.

Warren Buffett's track record speaks for itself. The celebrated capital allocator is known for his ability to assess the quality of an investment candidate. His discipline of buying at the right price is also commendable.

However, most people might not realize how much the Oracle of Omaha's investment playbook has changed over the decades. In his early partnership days in the 1950s, Buffett focused on finding cheap securities with the intention of selling these positions once the stock price approached or exceeded the estimated value. This early strategy was influenced by Benjamin Graham.

If Buffett were starting out in 2026, I'm certain that his philosophy would not resemble the blueprint from his early years. The market environment is just different today, with the big opportunities being harder to find.

With $10,000 ready to invest right now, the Omaha legend would probably buy this unstoppable stock.

Image source: The Motley Fool.

Buy great businesses at reasonable valuations

In the 1989 Berkshire Hathaway shareholder letter, Buffett laid out very clearly what he views as the optimal way to allocate capital: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." This framework would guide his decision-making process if he were just getting started today.

I have confidence that the $10,000 starting sum would go toward buying shares in Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). Interestingly, Berkshire Hathaway started accumulating a stake in the internet giant last year, a move that Buffett initiated. As of June 30, the conglomerate's entire position had grown to 78,791,167 Class A shares and 27,188,433 Class C shares, currently worth almost $37 billion in total.

Alphabet is now Berkshire's third largest holding. It sits behind Apple and American Express.

Buffett would invest in Alphabet instead of choosing a consumer staples, financials, or energy stock, sectors he's known for favoring. If Buffett were starting out today, he'd likely be more comfortable putting capital at risk in the technology sector. After all, any successful investor in 2026 must become knowledgeable about these sorts of companies, as these businesses dominate the market and economy.

Alphabet is a high-quality business. It possesses a wide economic moat, which Buffett can appreciate. Google Search and YouTube, for example, benefit from some of the most powerful network effects on the face of the planet. These platforms get better over time, and it's difficult to imagine a scenario where they get disrupted anytime soon.

Buffett would value the company's strong financials, even though it's embarking on a huge investment cycle to build artificial intelligence (AI), a move that led to negative free cash flow in the second quarter. During Q2, Alphabet reported a stellar operating margin of 34%. Its balance sheet is also strong enough to navigate any adverse economic headwinds.

Growth is also a critical part of the story. Alphabet's revenue jumped 24% year over year in Q2, marking an acceleration in six straight quarters. There is tremendous engagement across its platforms, driving higher ad sales, and Google Cloud is firing on all cylinders.

This AI stock trades at a compelling valuation. Buffett would be able to buy shares right now at a forward price-to-earnings ratio of 16.6.

The ideal holding period is forever

Step one in the process is to identify a wonderful company. Alphabet fits the bill. Step two is to acquire shares at an attractive valuation. The tech giant passes this test. It's time for a beginner Buffett to invest $10,000 in the stock.

The final part of the equation is to think about the time horizon. The Oracle of Omaha wrote in his 1988 letter that his "favorite holding period is forever." Alphabet looks like a business that can be owned for a very long time. It has durable competitive strengths, has proven itself to be adaptable, and is extremely innovative. This can be an indefinite position.

American Express is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, American Express, and Apple. The Motley Fool has a disclosure policy.

During the three-month period that ended June 30, Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) was a net buyer of stocks. It spent $20 billion on equity purchases, most notably adding to its stake in Alphabet, a business that is now the company's third-largest position.

This is a reversal from a multi-year streak of the conglomerate being a net seller of stocks, a trend that started in the fourth quarter of 2022. Unsurprisingly, it looks like Berkshire Hathaway is dealing with the limited opportunity set in today's market environment. It currently has a massive cash hoard of $359 billion, significant funds that would ideally be allocated to higher-return assets.

Warren Buffett's successor, Greg Abel, might want to consider this large-cap value stock. It trades 46% off its peak (as of Aug. 28), and it possesses some favorable characteristics. But will Berkshire Hathaway end up buying shares in September?

Image source: The Motley Fool.

Focus on the positive attributes

Buffett and Abel should take a look at allocating some of that $359 billion cash pile to Walt Disney (NYSE: DIS). In the late 1990s, the Oracle of Omaha was a shareholder of the entertainment leader, but this position was the result of his holding being acquired by the House of Mouse. Berkshire Hathaway sold its stake after a few years.

The valuation is too hard to ignore. Disney shares currently trade at a forward price-to-earnings (P/E) ratio of 14.3. With the overall S&P 500 index trading at a forward P/E multiple of 21, it can certainly be challenging to find value opportunities like this. Disney could be a solid value play that at least satisfies the rule of not overpaying for stocks.

This business has developed a wide economic moat. Its intellectual property (IP), consisting of its characters, storylines, franchises, and studios, is impossible for a rival to replicate. It doesn't matter how much money a competitor has. Peers can't recreate Disney's IP.

Before buying a stock, Buffett's philosophy (and likely Abel's, too) tells him that he should have confidence that the company's profit will be higher in the future. Disney checks the box. Its adjusted earnings per share climbed 19% in fiscal 2025 compared to the year before. Management expects this figure to rise by double digits in fiscal 2026. The sell-side analyst community thinks more growth is in store going forward.

Shares have been cheap for a while

Disney's valuation, moat, and profit growth should pique Abel's interest. However, the stock has been cheap for a while now, and the conglomerate has been sitting on a massive cash balance for years. There's no indication that Berkshire Hathaway will decide to buy shares in September.

In fact, I'd be surprised if Walt Disney finds its way into Berkshire Hathaway's portfolio anytime soon. Buffett and Abel are undoubtedly familiar with the business, but they might be hung up on two key risk factors.

The first deals with the declining legacy operations. Disney still has a huge presence in the traditional linear-TV market, most notably with its ABC and ESPN networks. The streaming entertainment secular trend has resulted in subscriber losses and falling advertising revenue in this segment. Abel likely wants to avoid this, as it's hard to forecast the speed and magnitude of the financial deterioration.

As it relates to the streaming industry, this company has a strong market position with its Disney+ and Hulu platforms. Combined, they had more than 190 million subscribers as of September last year. This segment is profitable, as it has established a scale that allows it to more than offset meaningful content costs.

However, competition is ferocious. Even Netflix, the industry's dominant force, is seeing growth decelerate. Disney could be in Abel's "too hard" pile, as it's not easy to predict how the streaming landscape will evolve in the next five to 10 years.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Berkshire Hathaway, Netflix, and Walt Disney. The Motley Fool has a disclosure policy.

Being a stock market investor can be a lucrative endeavor. The proof is in the pudding.

As of Aug. 28, the S&P 500 index (SNPINDEX: ^GSPC) has risen by 13% in 2026. This follows a gain of 16% in 2025, 23% in 2024, and 24% in 2023. Should the benchmark keep up the momentum this year, it will be another double-digit increase. This hot streak signals that it pays to be bullish.

It seems that all is well in the land of public equities, based purely on the performance metrics. But if you even remotely pay attention to the headlines, you know that not all investors are full of confidence and optimism. There's a level of uncertainty creating a shadow over the stock market, caused by a small number of factors.

Selling your stocks is a natural way to respond. However, history says that the uncertain environment is actually good news for long-term investors.

Image source: Getty Images.

What are you worried about?

To be clear, I believe the market and economy are always in some state of uncertainty. Said differently, there's never a point when an investor would claim a high level of certainty about where asset prices or interest rates, for example, are headed. These things are simply unpredictable.

That being said, there are two chief variables that I believe are causing the most fear, uncertainty, and doubt in the stock market these days.

The Federal Reserve is the first point of uncertainty. In May, Kevin Warsh replaced Jerome Powell as the chair of the central bank. And investors have been intensely focused on trying to figure out what his approach will be when it comes to running the Fed and handling monetary policy. His words are closely scrutinized. His views on inflation and interest rates are incredibly important to market participants and their decisions.

He has mentioned that fighting stubborn inflationary pressures is a priority. And he's hinted that the central bank may need to raise the fed funds rate before the year comes to a close. Investors don't know the timing or magnitude, so it makes them a bit uneasy.

The artificial intelligence (AI) build-out is another development that causes uncertainty. While stocks sitting at the center of this unprecedented boom have generally registered huge returns, investors have no clue how things will play out. And now that AI spending is having a material impact on the market and the economy, it's logical to ask whether the music will stop playing. The question centers on the durability of the AI secular trend.

The "Magnificent Seven" stocks make up about one-third of the entire S&P 500 index, according to research from The Motley Fool. These businesses are heavily exposed to the AI craze. Any slowdown with their financial metrics could snowball into panic among the investment community. This would undoubtedly pressure the overall market.

Stay bullish

Despite the S&P 500 index's persistent climb higher, Kevin Warsh and the AI trade support FUD in the minds of investors. But this doesn't mean that being bearish is the right perspective. In fact, investors are better served by always remaining bullish, whether FUD is at extreme levels or when it's more muted.

The S&P 500 index's historical track record proves that optimistic investors, especially those who think in terms of several years and decades, are rewarded. This doesn't mean that there won't be the occasional correction or bear market. These are normal.

However, they shouldn't discourage you from continuing to put money to work. And if uncertainty gets to a point that it causes stock prices to crash, it's a good time to be aggressive. Being opportunistic and buying the dips can boost your portfolio returns.

Neil Patel 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.

Over the past five weeks, the market has pumped some life into Netflix (NASDAQ: NFLX). Shares of the entertainment powerhouse have soared 16% (as of Aug. 27). But this doesn't take away from the negative perception surrounding the business.

This streaming stock currently trades 40% off its record from June 2025. This isn't uncharted territory. Long-time investors understand how wild the roller-coaster ride has been. In fact, Netflix has seen its share price fall more than 40% on seven total occasions, including the current drawdown, since its initial public offering (IPO) in May 2002.

With the shares putting up a mind-boggling trailing-20-year return of 29,700% and the company sporting a significant market capitalization of $332 billion, Netflix obviously bounced back. But it's important for investors to look at history to guide their thinking about what might come next for the stock.

Image source: The Motley Fool.

The same old song

This stock isn't protected from some pretty serious bouts of volatility. Less than five months after the IPO, Netflix shares tanked 71% from a fresh all-time high. They then went on to skyrocket 725% over the following 12 months.

The stock fell by 64% from January 2004 to the end of August that year. During the subsequent year, it climbed 55%. Just days before Halloween in 2008, Netflix shares were down by 56% from a record high reached just more than six months earlier in April. They more than tripled in the 12 months after.

Netflix's worst performance started in early July 2011. The stock lost 82% of its value by the beginning of August 2012. It then surged 357% over the following year. Christmas of 2018 was not nice. Netflix shares dipped 44% during a more than five-month period of time before the holiday. By Christmas Eve of 2019, they had risen 42%.

From the end of October 2021 to early May 2022, the stock fell 76%. It proceeded to register a 107% gain over the next 12 months.

It goes without saying that the investment community reacts to negative news or the anticipation of difficult times ahead. That's how the stock market works. During each of the 40% (or more) drops Netflix experienced in the past, there was something that caused fear, uncertainty, and doubt.

In 2004, direct competitor Blockbuster Online engaged in a price war with Netflix. In 2011, it was the failed Qwikster strategy that tried to split the streaming service from the DVD-by-mail service. In 2022, the business reported a surprise subscriber decline, which resulted in a rapid deterioration in market sentiment.

Over the subsequent year after Netflix shares fell 40% or more historically, they averaged a positive return of 248%. Is this the kind of performance investors should wait patiently for as we look to 2027?

This time could be different

History doesn't always repeat. However, it does rhyme. Investors should adopt this perspective when it comes to Netflix. Don't expect the current drawdown to eventually play out like past declines. Don't believe that the outcome will be drastically different, either.

Right now, Netflix leans more toward being a value stock. It trades at a forward price-to-earnings ratio of 25.8. From a historical point of view, shares are usually never this cheap.

Before you rush to invest, though, consider the current state of the business. Competition has arguably never been so intense. It's a battle for eyeballs and attention, with platforms like Alphabet's YouTube and Meta Platforms' Instagram thriving with respect to engagement, especially on mobile devices.

Netflix isn't going to report the same level of growth it did in the past. So, the one critical factor that drove the stock's incredible gains historically is becoming less of a catalyst. It's impossible to know what the coming 12 months will bring for shareholders.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Netflix. The Motley Fool has a disclosure policy.

When it comes to artificial intelligence (AI), virtually all the attention goes to how much money is being spent. According to Nvidia management, there will be $3 trillion to $4 trillion in related infrastructure spending per year by the end of this decade. It doesn't matter how you look at it. This is a gargantuan dollar figure.

While the spending boom has benefited many companies, the biggest uncertainty surrounding the AI trend is how this technology will impact the broader macro picture in the long run. The most bullish supporters and optimists believe that AI will lead to unprecedented economic activity. New business models, products, and services will be introduced, the thinking goes.

If you adopt this upbeat view, then you might think that Nvidia is the best AI stock to buy. It's hard to argue with that perspective, given that shares have surged 934% in the past five years (as of Aug. 27).

However, the leading investors consider knock-on effects and how they might impact certain companies. If AI eventually lives up to the hype, these two S&P 500 stocks look like once-in-a-decade buying opportunities right now.

Image source: The Motley Fool.

Controlling the payments layer will be even more lucrative

Over the past 10 years, U.S. gross domestic product (GDP) has increased nominally at a compound annual rate of 5.7%. What if, in a very bullish scenario thanks to AI progress, GDP will grow at a yearly clip of 6.7%? This means that in a decade, the domestic economy would be 91% bigger. This is a larger gain than the 74% cumulative increase of the past 10 years.

The U.S. accounts for 25% of global economic activity. This thought experiment doesn't factor in the huge opportunity for AI to have a positive impact on international markets. This is obviously not an insignificant amount in terms of GDP dollars.

Nonetheless, notably faster economic growth, leading to higher GDP in the future, lays the foundations for greater income generation and spending activity Visa (NYSE: V) and Mastercard (NYSE: MA) are positioned well to benefit.

In their latest fiscal quarters (corresponding to the three-month period that ended June 30), they processed $30 trillion in combined annualized total payment volume. There would be meaningful incremental spending in an AI-powered economy. This would translate into more revenue for these companies, as they can collect more in fees whenever their credit or debit cards are used at checkout.

These businesses are working on agent payment capabilities

AI agents, or fully autonomous software systems that handle specific tasks, are believed to have tremendous potential. Visa and Mastercard are both thinking about the possibility of AI agents handling more commerce on behalf of individual consumers, businesses, financial institutions, and governments.

These companies are playing offense in an effort to be ahead of the curve if agentic payments really take off. Visa's Intelligent Commerce Connect and Mastercard's Agent Pay are platform solutions enabling AI transactions.

It's hard to say how much incremental payment activity agentic AI will create as opposed to being a substitute for existing financial transactions. But again, Visa and Mastercard seem to be playing with a huge advantage.

Don't underestimate how robust these network effects are

The idea of cryptocurrencies, specifically stablecoins, also comes to mind if AI adoption grows rapidly and agents handle more economic activity. In theory, stablecoins could completely undermine the competitive positions of Visa and Mastercard as they use blockchain technology to connect consumers and merchants.

Again, Visa and Mastercard aren't shying away. They are working on integrating stablecoins into their infrastructures.

It's smart not to underestimate how robust their network effects are, however. Visa and Mastercard have deep relationships with financial institutions, merchants, and consumers. This gives them unbelievable distribution and adoption, which entrenches their payment ecosystems in ways stablecoins don't have.

If you're bullish on the impact AI will have on the broader economy, considering an investment in Visa and Mastercard is a wise move.

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

During its fiscal 2027 second quarter (ended July 26), Nvidia (NASDAQ: NVDA) reported a year-over-year revenue gain of 106% to $96.2 billion. Diluted earnings per share soared 128% to $2.46. These two headline figures came in ahead of Wall Street estimates. Shares are up 8% since the announcement (as of Aug. 28).

Nvidia remains the dominant artificial intelligence (AI) enterprise. And the latest numbers support the claim that demand for its data center chips isn't softening. Investors that were bearish have lost out on big gains.

But history says that the month of September could be a down period for this AI stock.

Image source: The Motley Fool.

Past data doesn't support a huge gain in September

September is historically a weak month for the S&P 500 index. Over the 10-year period from 2016 through 2025, the closely watched benchmark posted an average loss of 1.3% in September. This didn't prevent the index from posting a fantastic total return during that time.

Nvidia tracks similarly. Over the same period (2016 through 2025), the technology stock's price declined an average of 0.8%.

Investors should come away with no clear takeaway. It's impossible to predict how Nvidia shares will perform in September. The business continues to operate at full strength from a fundamental perspective. This momentum can lift the stock price.

However, inflation remains a problem for the economy. And there's still a chance that the Federal Reserve raises the Fed funds rate before the year ends. This could pressure the equity market's performance as investors adopt a downbeat view of the tighter monetary policy.

Set a five-year time horizon

It's so easy for investors to get caught up in the short term. There is a constant flood of information. While paying attention to these things can make you feel very knowledgeable about the companies in your portfolio or on your watch list, it distracts from what really matters.

Spend less time thinking about what September will bring. Instead, focus your attention on the next five years. This is the correct time horizon to adopt before deciding whether to buy a particular stock.

Nvidia shares soared 901% in the past five years. Given that it's now a $5.5 trillion company, I don't believe it's realistic to expect a similar return over the next 10 years.

But that doesn't mean investors should completely disregard the stock. There are some very compelling bull-case arguments to look at.

Nvidia's growth continues to be exceptional. And sell-side analysts believe the top line will expand at a 58% yearly rate between fiscal 2026 and fiscal 2029.

This is one of the most profitable enterprises on Earth. A supply-and-demand imbalance, resulting in sustained pricing power, supported a 62% net profit margin in the second quarter.

After such a jaw-dropping performance, you might initially assume the current valuation is expensive. This is far from the truth, though. Investors can buy this "Magnificent Seven" stock at a forward price-to-earnings (P/E) ratio of 23.9. This is only a 14% premium to the S&P 500 index.

This setup makes Nvidia appear like a no-brainer buying opportunity. The financials are impressive. And the valuation is attractive.

But the best investors put in the effort to understand the risks. Any business that was registering the revenue growth and profitability that Nvidia was would likely command a valuation that's a significant premium to the benchmark index. The market must be worried about something.

I believe the chief risk relates to the durability of the AI infrastructure build-out. On the Q2 2027 earnings call, Chief Financial Officer Colette Kress mentioned that the five top hyperscalers will spend $1.3 trillion on capital expenditures in 2027.

These is an exciting forecast. However, there is a chance that this spending boom slows sooner than the bulls hope. A lot of capital is riding on AI delivering product and service innovation and new economic activity. If it fails to deliver on its promise, you can bet that money flowing to AI labs, hyperscalers, and the chip sellers will take a hit.

This risk should not be ignored even though it's still worth taking a chance on Nvidia shares right now.

Neil Patel 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.

In the wild world of cryptocurrencies, there is perhaps no digital asset that has driven more speculative fever than Shiba Inu (CRYPTO: SHIB). It produced an absolutely mind-boggling return in 2021. But its price currently sits far below its peak, a setup that some bulls might find enticing.

In the stock market, there is certainly no business that has driven the market's excitement this decade quite like Nvidia (NASDAQ: NVDA) has. The dominant artificial intelligence (AI) chip supplier continues to report fantastic financial results. It's powering this revolutionary technological boom.

How likely is it that Shiba Inu outperforms the top AI stock in the coming five years? Here's what history suggests will happen.

Image source: The Motley Fool.

Momentum favors shares in the AI enterprise

Past performance doesn't have any influence on future results. However, it's impossible to ignore what recent trends might suggest.

Shiba Inu's token has fallen 28% during the past five years. And it's 94% below its all-time record, which was established in October 2021.

Nvidia is in a much more favorable position, as it has positive momentum working to its benefit. While shares are about 3% lower than their peak, they have skyrocketed 934% during the past five years.

After posting such a stellar gain and even at its current market capitalization of $5.5 trillion, Nvidia doesn't look like an expensive stock. It trades at a forward price-to-earnings ratio of just 23.9, despite being arguably the most important company on the face of the planet right now.

That valuation is even more compelling when factoring in business fundamentals. During the fiscal 2027 second quarter (ended July 26), Nvidia reported year-over-year revenue and net income growth of 106% and 126%, respectively. Demand for its data center graphics processing units (GPUs) remains off the charts. This, in addition to supply constraints, supports incredible pricing power that trickles down to the bottom line.

Nvidia sells valuable products and services, has a wide economic moat that limits competition, is highly profitable, has tremendous growth potential, and sits in the middle of a major technological trend. Companies like this have historically won over the admiration of the investment community.

Between now and 2031, it would be a shock to see Shiba Inu outperform Nvidia.

Shiba Inu is trying to claw back sizable losses

Based on its market capitalization of $3.2 billion, Shiba Inu is the second-most popular meme token after Dogecoin. This crypto has drawn the attention of speculators looking to trade at the right times in an effort to score quick profits.

However, the community's support is clearly weakening, as evidenced by the token's steady and long-term price decline. It doesn't help that there are thousands of other meme coins people can bet on. This diverts attention.

Nvidia's value proposition is clear, as mentioned. Shiba Inu's purpose is a major question mark. Besides having the support of its community, it lacks the network effect or technical capabilities that more prominent blockchains possess. A history of no durable catalysts means that this trend isn't going to change.

Pay attention to the downside

To be fair, though, Nvidia faces its own set of risks. The most obvious is that the AI boom fails to deliver tangible results in the short, medium, and long terms. This would prompt a significant slowdown in data center infrastructure spending, which would hurt the company's impressive financial performance.

In this scenario, the valuation and stock would suffer. The market would lose confidence in the business.

Still, during the next five years, there's a higher probability that Shiba Inu will become irrelevant and see its price continue to fall, approaching zero. The blockchain offers no real-world utility and hasn't demonstrated a way to add value. Solving a problem and adding value for users is table stakes for any cryptocurrency to stand the test of time. Shiba Inu doesn't instill confidence in this regard.

Neil Patel 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.

If your goal were to find an asset that outperformed Dogecoin (CRYPTO: DOGE), you'd be searching for a long time. The popular cryptocurrency has seen its price skyrocket 38,020% in the past decade (as of Aug. 27). This monster gain would've turned a $10,000 starting sum into $3.8 million today.

But the journey has been full of volatility. Dogecoin currently trades 87% off its all-time record from May 2021. So, there is a lot of work it needs to do to win back the hearts of the investment community. Maybe the rest of this decade will bring some good news.

Can this meme token's price soar 1,036% in four years to reach $1 by 2030?

Image source: Getty Images.

Look at historical trends

Dogecoin has been a wildly successful investment over the last 10 years, as mentioned. Based on this performance, it seems reasonable to think there's a remote possibility the digital asset could reach $1 in four years. Speculative behavior can fuel an unprecedented bull run. This is common in the cryptocurrency industry.

However, Dogecoin reveals a much more disappointing trend if you zoom in. The token's price has tanked 68% over the past half-decade. The writing is on the wall.

The market is clearly losing interest in this digital asset. That could not be any more obvious. While Dogecoin still experiences the occasional price surge, its downward spiral is hard to ignore. Investors don't want to catch a falling knife.

Looking out to 2030, it's extremely difficult to be bullish about Dogecoin's prospects. Its most powerful attribute, the strong community of Dogecoin proponents, isn't something to bet your hard-earned savings on. And even this group of believers is losing hope. Otherwise, the cryptocurrency's price wouldn't be falling precipitously.

Competition could be one driving force that has had a huge impact, pressuring interest. Speculators have an abundance of options to bet on. According to CoinMarketCap, there are more than 5,000 meme tokens. In search of more exciting opportunities with higher upside, people will turn their attention to smaller and less-proven cryptocurrencies. Dogecoin is losing its cool factor.

What's the value proposition?

Because cryptocurrencies are a relatively new asset class, investors are still trying to figure out what purpose they serve. This is the right lens to view Dogecoin through. I don't think this meme token solves a problem or introduces real-world utility. Eventually, all cryptocurrencies need to figure out what their value proposition is, or there's a high likelihood they become worthless.

Dogecoin was created in 2013 as a funny competitor to Bitcoin (CRYPTO: BTC). While this background helped it gain a following, it also shines a spotlight on Dogecoin's shortcomings. This cryptocurrency isn't an attractive store-of-value asset. That's because it has an unlimited supply. The number of tokens in circulation, currently at 156 billion, expands by more than 5 billion each year. There is persistent dilution at play.

Bitcoin, on the other hand, has a fixed supply cap of 21 million units. This is enforced by every node running the cryptocurrency's software.

Dogecoin also functions as a payments system. However, it falls short in this area as well. Fintech enterprise Block's Square segment enabled Bitcoin-based payment acceptance for millions of its merchants earlier this year. Dogecoin adoption won't ever come close to this level of functionality.

It's easy to look at Dogecoin's trailing 10-year return and assume that the positive momentum will return, suggesting that the current dip is a smart time to buy. But the bear case is much more convincing.

Investors should avoid this meme token. Its price isn't reaching $1 by 2030 or ever. In fact, it wouldn't be surprising to see Dogecoin's price trade lower in four years than where it is today.

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

Tim Cook took the reins as CEO of Apple (NASDAQ: AAPL) on Aug. 24, 2011, when he replaced Steve Jobs. Since that date, shares of the consumer technology powerhouse have climbed a jaw-dropping 2,240% (as of Aug. 27). The company's market capitalization exploded from $349 billion then to $4.6 trillion today.

On Sept. 1, John Ternus will become the next CEO of Apple. He's stepping into the role after having been senior vice president of hardware engineering since 2021. He has massive shoes to fill.

Apple is welcoming Ternus into the top job right before the stock market typically has its worst month of the year. But don't panic and sell your stake. Instead, stay focused on the long term.

Here's what investors should know.

Image source: The Motley Fool.

Here comes September sadness

The S&P 500 index (SNPINDEX: ^GSPC) has generated notable wealth for patient and diversified investors over time. Its average annual total return is about 10%. This means a $10,000 starting capital outlay, sitting idle without any further cash infusions, would be worth $174,000 in 30 years. No one will argue with that outcome.

However, the market has never risen in a straight line, and there will be plenty of times when investors won't be enjoying gains. To own stocks, you need to be able to handle the volatility along the way. This is timely advice to remember right now.

There's something called the September effect that investors might want to get familiar with. September, on average, is the worst month of the year for stocks. During the 10 Septembers from 2016 through 2025, the S&P 500 index posted an average return of negative 1.3%.

Of course, this doesn't guarantee that the market will decline during the next month. In five of those 10 years, the S&P 500 actually gained ground.

Long-term investors should be unfazed

What is known to be the worst month in the stock market is awaiting John Ternus as he becomes CEO of Apple. He's taking control of one of the world's most dominant businesses after two highly successful leaders in Cook and Jobs called the shots.

Leadership changes don't always go smoothly. And as mentioned, the S&P 500 index has a rough track record in Septembers.

Should Apple shareholders dump their holdings? That might seem like a sound play. But it's not the right move to make.

Ternus isn't an external hire. He has been with Apple since 2001. There are few people on Earth who have as deep an understanding of this business as he does. This significantly reduces the risk of him making any operational or strategic blunders.

Additionally, Ternus has been in his current role on the executive team for five years. He oversaw the numerous new devices Apple launched this decade. He knows precisely what variables drive the company's success in hardware and product development.

I believe it'll be business as usual for Ternus. He doesn't have to reinvent the wheel here. Apple has become one of the most successful companies ever. There's no need to mess with what's been working for so long.

And clearly, the iPhone -- Apple's cash cow product -- is working. Over the first three quarters of its fiscal 2026 (a period that ended June 27), iPhone sales jumped 22% year over year. Demand for the latest iPhone 17 family has been impressive, despite the fact that many consumers are still waiting to buy until there's an artificial intelligence update for Siri.

At its September event, Apple is expected to unveil a foldable iPhone, among other announcements. As is typically the case, this should drum up renewed interest in the brand and shine a spotlight on its innovation prowess. Ternus knows how important it will be to start his tenure on the right foot.

And on the topic of September being a negative month historically for the S&P 500 index, long-term investors shouldn't be fazed. Assuming you have decades until it's time to retire, a single month's performance will have little impact on how your portfolio will do. The best investors stay the course.

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

The bulls make money. The bears lose money. The stock market keeps proving it pays to be optimistic. In 2026, the S&P 500 (SNPINDEX: ^GSPC) has risen by 12% (as of Aug. 26). Should it maintain this gain, this will be the fourth straight year the benchmark posted a double-digit calendar return.

But it's time to take a step back and see the present situation clearly. The stock market is doing something not seen in more than a quarter-century. Here's what history suggests is coming next for Wall Street.

Image source: Getty Images.

Expensive by any measure

In 1988, economist Robert Shiller developed the cyclically adjusted price-to-earnings (CAPE) ratio to more accurately assess valuation. It's a popular tool used today.

Right now, the S&P 500 trades at a CAPE ratio of almost 42. It has expanded by 57% in the past decade. And over the past 155 years, it has only been above 40 during one other time. This was the technology-driven dot-com bubble era of 1999 and 2000. Any market historian would agree that this period was marked by extreme investor speculation.

From the start of 2000 to the end of 2009, a 10-year period that directly followed the late innings of the internet boom, the S&P 500 generated a negative total return of 9%. This was a lost decade. History suggests that the stock market will put on a similar performance between now and 2036.

Let's say you no longer believe the CAPE ratio is an accurate measure of valuation. Another tool to use is the Buffett indicator, a data point introduced by the Oracle of Omaha in 2001. This figure shows the total U.S. stock market capitalization relative to the country's GDP. Right now, it's at 237%. This is the highest reading on record.

It appears that no matter what measure you use, the stock market is expensive. All else equal, a higher starting valuation reduces the margin of safety and raises the probability of lower future returns. This is a basic principle in value investing.

It pays to be a long-term bull

Investors who understand this information will come away with a clear lesson. Maybe it's not a smart idea to invest in an S&P 500 fund, such as the Vanguard S&P 500 ETF (NYSEMKT: VOO). The best move might be to wait for a sizable pullback before putting money to work at a more attractive valuation.

This sounds like an intelligent strategy. However, there are compelling reasons to remain bullish over the long term. First, there's no rule that the CAPE ratio can't keep expanding. Exactly 10 years ago, it was at 26.7, an expensive measure based on historical data. But the S&P 500 went on to generate a 317% total return in the last decade. And as mentioned, it's on pace for a fourth consecutive double-digit gain.

The stock market in 2026 is structurally different than at any point in the past. At the end of 2023, money in passive funds exceeded that in active funds for the first time. This trend introduces fresh capital into the mix, raising demand for stocks and pushing asset prices higher. It's a powerful and durable tailwind.

It's also impossible to ignore the rise of the technology sector, which accounts for 37% of the Vanguard S&P 500 ETF. Some of these companies are easily the most dominant the world has ever seen. And it looks like they have bright futures ahead. Their success warrants higher valuation multiples.

You might think the ideal move is to try to time the market. But real wealth is made by investing early and often. Even investors who buy in at a CAPE ratio of 42 should be rewarded in the very long run.

Neil Patel 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.

There isn't a single investor whose wisdom has the sway that Warren Buffett's does. The investing legend, who was the longtime CEO of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB), has an unbelievable track record managing capital. But his recommendation for the average investor couldn't be any simpler.

The Oracle of Omaha has offered the same investing advice for decades. History says he's never been wrong.

Image source: The Motley Fool.

Buy the S&P 500

"By periodically investing in an index fund, for example, the know-nothing investor can actually outperform most investment professionals," Warren Buffett wrote in Berkshire Hathaway's 1993 shareholder letter.

In 2008, he famously made a bet that five hedge funds-of-funds could not outperform a low-cost S&P 500 index (SNPINDEX: ^GSPC) fund over a 10-year stretch. Buffett easily won that bet.

He wrote in Berkshire Hathaway's 2013 shareholder letter that 90% of the money left for his wife after his death be invested in an S&P 500 index fund. "I suggest Vanguard's," he added.

It's clear that Warren Buffett has long favored the Vanguard S&P 500 ETF (NYSEMKT: VOO). One of the main reasons why is the cost. This exchange-traded fund (ETF) has an expense ratio of just 0.03%. This presents an extremely attractive proposition when viewed next to the high fees typically charged by active managers, the vast majority of which underperform the market in the long run.

Since the S&P 500 index was created in its current form in 1957, the benchmark has generated an average annualized total return of 10%. A starting $10,000 investment would be worth over $174,000 after 30 years based on this performance.

In the last decade, though, investors have been rewarded with a better showing. The S&P 500 index has produced a total return of 315% (15% on a yearly basis) since late August 2016 (as of Aug. 25).

Buffett's overarching view is to never bet against America. In other words, he has always been bullish on the inventiveness and entrepreneurial spirit that make up the fabric of this country. And the S&P 500 index is a great way to bet on that.

As the name suggests, there are 500 or so large and profitable U.S. companies in the index that span every sector of the economy. But there is concentration to be mindful of. The information technology sector makes up almost 37% of the entire ETF. The financials sector is a distant second, representing 12.5%.

Why Buffett could be wrong in the future

History tells us that Warren Buffett has never been wrong when it comes to this recommendation. The S&P 500 index has done a fantastic job at building wealth for long-term investors.

However, a proper analytical exercise isn't complete without at least considering how the legendary former CEO of Berkshire Hathaway might be wrong going forward. Investors will come away with a comprehensive understanding of what the future might bring.

One of the most obvious reasons the S&P 500 index could disappoint investors over the coming decade is its current valuation. The benchmark's CAPE ratio is currently 41.8. The data is clear about what can happen when this multiple is so high. In the past, the S&P 500 index produced a negative annualized total return over the decade following a starting CAPE ratio above 40.

To be fair, though, the market today is dominated by technology enterprises, as alluded to earlier. These businesses generally have significant growth potential, huge profits, wide economic moats, unmatched talent density, and global customer bases. This supports ongoing investing returns, even though the overall S&P 500's performance is impacted greatly by a small number of businesses.

Looking at the historical data, it's very difficult to argue with Warren Buffett's perspective. This means that the Vanguard S&P 500 ETF is an excellent choice for investors.

Neil Patel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Berkshire Hathaway and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Peloton Interactive (NASDAQ: PTON) was arguably the hottest business during the depths of the COVID-19 pandemic. It couldn't sell enough of its bikes and treadmills. However, that demand surge was short-lived. And shareholders have suffered.

In the past five years, this consumer discretionary stock has fallen 95% (as of Aug. 26). Had you invested $10,000 in Peloton shares back in late August 2021, you'd have less than $500 right now. The innovative fitness enterprise has been an extremely disappointing portfolio holding.

Now that the stock is so far off its peak, opportunistic investors with a contrarian mindset might be ready to take action. History says this is what it would take for Peloton shares to double in the next five years.

Image source: The Motley Fool.

Profits did nothing to lift the stock

Peloton reported financial results for its fiscal fourth quarter on Aug. 6. For the entire fiscal year of 2026, the business collected positive net income of $63.2 million. This was the first time in its entire history that the company had achieved this.

The management team embarked on cost-cutting measures, which further trimmed unnecessary bloat. Peloton reached its goal of reducing run rate expenses by $100 million.

For what it's worth, consensus analyst estimates call for Peloton's earnings per share to rise 11.1% in fiscal 2027. Then, in fiscal 2028, the outlook calls for a 23.3% year-over-year decline. This isn't encouraging.

This business has long been a money-losing operation. So naturally, you'd assume that the stock would react positively to the company's first-ever profitable fiscal year. This wasn't the case. Shares slid 16% following the announcement of Q4 results.

Growth is the missing ingredient

It's no surprise that the market loves a good growth story. Look at Nvidia, for example, as proof that investors can't get enough of a business that's posting outsize revenue gains. This used to be the way to describe Peloton. The market rewarded its rapid expansion.

The stock hit its all-time high in January 2021. In the quarters leading up to that point, it wasn't surprising to see Peloton report 100% year-over-year revenue growth. Demand was incredible.

This means that for the share price to double over the next five years, Peloton has to get back to registering strong sales gains. Achieving a fully profitable fiscal year on the basis of generally accepted accounting principles (GAAP) isn't going to cut it. Investors want to see positive momentum.

During its best years, Peloton was expanding in remarkable fashion. It has struggled mightily to grow even a little in recent years. Revenue decreased 1.8% year over year to $2.4 billion in fiscal 2026. This was the fifth consecutive fiscal year that the top line shrank. It's no longer accurate to call this a post-pandemic slump. This disappointing reality is the new normal for Peloton.

The company's leadership team forecasts revenue of $2.3 billion to $2.4 billion in fiscal 2027. At the midpoint, this outlook calls for a 3.9% sales dip. That's not reassuring.

It doesn't help that Peloton's membership base keeps contracting. As of June 30, the business counted more than 2.5 million connected-fitness subscribers, down 9% over the previous 12 months. The concern is that this company's best days are in the rearview mirror.

Peloton's C-suite has been a game of musical chairs in recent years. These management teams have implemented various strategies to spur growth, including striking distribution partnerships, launching upgraded equipment, and integrating artificial intelligence capabilities with the workout software. Nothing has moved the needle meaningfully.

Shares trade at a price-to-sales ratio of just 1. This valuation can be a compelling entry point if you adopt the contrarian belief that the business is starting to turn things around. There is no evidence that Peloton can return to healthy user or revenue growth anytime soon, however.

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

Through its 928 global warehouses, Costco (NASDAQ: COST) sells a vast array of merchandise at extremely low prices. This is a boring business model. However, it has rewarded long-term investors.

The company's share price has climbed 112% over the past five years (as of Aug. 26). It has crushed the overall market. It's hard for investors not to be bullish, with an eye toward the future, even though it's time for a reality check.

If you buy this retail stock with $10,000 today, I predict it could be worth $13,400 in five years. Here's why.

Image source: The Motley Fool.

Higher profits introduce a favorable tailwind

The most important catalyst that will propel this stock is the company's profit trends. Over the past five years, Costco's diluted earnings per share (EPS) rose at a compound annual rate of 12.4%. According to consensus analyst estimates, this metric will increase at a yearly clip of 11.1% between fiscal 2025 and fiscal 2028.

Given that Costco is a mature enterprise these days, I think the bottom line will grow at a compound annual rate of 10% from fiscal 2026 through fiscal 2031. This seems like a realistic outcome, as it marks a deceleration from the prior half-decade.

In my view, there is minimal risk to this outlook actually playing out. One main reason why is that Costco's same-store sales (SSS) continue to rise with each passing fiscal quarter and year. In July, SSS climbed a strong 8.9%, despite the uncertain environment we're in.

The business is also opening new warehouses. Management plans to expand the physical footprint by 30 or more net new stores each year in the future, with ample opportunity both in the U.S. and abroad.

And Costco's membership base, now at 82.9 million households, is only getting bigger. Consumers have come to appreciate the value proposition. This supports Costco's membership pricing power.

What about the valuation?

Earnings growth is certainly an important catalyst that investors should continue to monitor. Costco's consistent profit gains are a key part of the investment thesis, especially as it opens new warehouses, signs up more members, and grows SSS.

However, investors should never ignore a stock's valuation. This data point helps assess the overall market's perception of a particular business. Paying too high a price can be detrimental to prospective returns.

Based on Costco's price-to-earnings (P/E) ratio of 48.1, investors seem to view this company in a very favorable light. This is true even though the multiple has contracted 24% from a recent high of 63.2 in early 2025. In the past decade, the P/E ratio has averaged 39.8.

The market appreciates this business as a safe haven, as the stock gives investors peace of mind during adverse times. Costco continues to perform well financially, regardless of the macro picture. I believe this has a huge influence on the valuation, as the company isn't a fast grower anymore, which is typically what commands a premium P/E ratio.

But I believe it's rational to expect that Costco's P/E multiple of 48.1 will steadily start to come down over time. Five years from now, it wouldn't be surprising to see the ratio drop closer to the trailing-10-year average of 40. This introduces a 17% headwind to the stock's performance.

As alluded to earlier, Costco's diluted EPS is projected to be $29.33 in fiscal 2031, 61% higher than the fiscal 2026 forecast. Factoring in a 17% reduction in valuation, Costco shares will trade at $1,281 in five years. If the S&P 500 index repeats its trailing five-year performance, the retail stock will drastically underperform.

I have more confidence that Costco's profits will trend as expected. It's anyone's guess what the valuation will be. If investors continue to admire this business as they have historically, shares can certainly keep up their track record of beating the market.

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

In October 2025, shares of Uber (NYSE: UBER) established a record. In the three years leading up to that peak, they soared 237%. Since that all-time high was reached, though, shares have fallen 20% (as of Aug. 25).

This downturn hasn't been a marketwide development. The S&P 500 index has climbed 14% after Uber hit its peak price.

The investment community is clearly worried about something as it relates to Uber's business. But I don't believe the market's bearish view on this growth stock is warranted. Here's why.

Image source: Getty Images.

Autonomous vehicles add uncertainty to the driver's seat

If there's one thing investors hate, it's uncertainty. And when it comes to Uber, the biggest question mark focuses on the development of autonomous vehicle (AV) technology. There are two companies that immediately come to mind.

First is Alphabet's Waymo. In March, it was completing 500,000 paid weekly rides in 10 U.S. cities. Industry experts believe this platform has a huge lead in the AV race.

There's also Tesla. Its robotaxi service is available in six U.S. cities, eclipsing 380,000 cumulative unsupervised miles as of early August. Elon Musk has made it a corporate priority to expand this platform globally.

Investors are right to view the development of AV technology as a long-tail risk facing Uber. If Waymo and Tesla eventually create extremely safe self-driving capabilities that clear regulatory hurdles, provide an exceptional experience for riders, and find broad adoption, then their individual platforms could start to register tremendous success.

In a world dominated by AVs, Waymo, Tesla, and others could offer much cheaper rides. This would undermine Uber's entire business model.

Here's why Uber is well positioned

Uber isn't sitting on its hands. It has partnered with numerous AV companies to help them scale their operations. Uber plans to facilitate AV rides in 15 cities by the end of 2026. The business has also made certain equity investments in AV companies.

According to CEO Dara Khosrowshahi, AV rides represent only 0.1% of the worldwide ride-hailing market. He makes a valid argument that self-driving vehicles won't control the entire mobility market in the future. Management believes a hybrid model consisting of human drivers and self-driving tech will exist to handle demand that fluctuates drastically based on what day or time it is.

It's all about maximizing vehicle utilization and minimizing dead time. Uber's tech know-how and expertise at matching supply and demand at scale is a huge strength.

Uber's 20 largest U.S. markets account for 30% of its domestic gross bookings. Even if AV rides from other providers started to rapidly take market share in these markets, it wouldn't completely disrupt this business, which benefits from geographic diversification. What's more, Uber still has the advantage of being able to add supply to serve periods of peak demand.

Is Uber stock a buy right now?

Investors should have no complaints about Uber's financial performance. During the second quarter (ended June 30, gross bookings jumped 24% year over year to $58 billion. This drove revenue 12% higher. Uber currently has 208 million monthly active users on the platform, up 16% year over year.

Profitability is also impressive. The operating margin was 13.3% in Q2. This has expanded significantly in recent years as Uber's business scales up and the leadership team controls costs.

The company possesses a strong brand name. Furthermore, it benefits from powerful network effects. The mobility and delivery segments provide better value propositions as they attract more users. This supports Uber's competitive position.

Shares trade at an EV-to-EBIT (enterprise value-to-earnings before interest and taxes) ratio of 23.3, near the cheapest level ever. There's no doubt that this valuation multiple would be markedly higher if it weren't for the AV risk. As mentioned, Uber is positioned well. This justifies investors at least taking a closer look at buying this stock.

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

Apple (NASDAQ: AAPL) has been an incredible winner for its long-term shareholders. In the past 10 years, the share price has rocketed 1,050% higher (as of Aug. 25), a gain that crushed the overall market's returns.

There is no variable that highlights how exceptional this company is more than its earnings performance. Apple is one of the most profitable businesses in the world. This is a key catalyst that will keep benefiting investors in the future.

Apple currently trades at just under $310 per share. Here's why the Magnificent Seven stock could rise by 18% over the next year to $366 per share.

Image source: The Motley Fool.

A robust competitive position supports the bottom line

In its fiscal 2026 third quarter, which ended June 27, Apple's net profit margin came in at 27.2%. The business generated $109.4 billion in net sales in the quarter, which resulted in $29.8 billion in net income. On an annualized basis, its profits exceed the market capitalizations of all but 194 publicly traded companies in the world.

This is a wildly profitable enterprise. Credit goes to its robust competitive position.

It starts with the brand's premium positioning that supports its pricing power. Apple doesn't sell the cheapest products. It goes after higher-income consumers who don't balk at its price tags.

Its ecosystem, which seamlessly integrates hardware and software, keeps people locked in. Furthermore, Apple's services segment is extremely profitable, carrying a gross margin of 75.6%.

Apple's income statement looks fantastic. However, investors should also take a closer look at the company's cash profits. This topic has become more important recently, especially given the massive capital expenditures being laid out by other tech giants that are aggressively involved in the artificial intelligence (AI) boom. Huge capital expenditures take a toll on a company's free cash flow, which means less money available to pay dividends, buy back shares, pay down debt, or deploy for mergers and acquisitions.

Fortunately for shareholders, Apple's AI strategy doesn't involve building a fleet of AI data centers. Its capex totaled just $6.8 billion through the first nine months of its fiscal 2026. Consequently, its FCF was over $110 billion. This will enable the business to maintain its capital returns program.

Growing profits drive stock gains

According to analysts' consensus estimates, Apple is expected to earn $8.82 per share in its fiscal 2027. That would be 18.2% higher than the forecast total for its current fiscal year. Assuming the stock's price-to-earnings ratio stays constant, this implies that the stock price will increase by the same 18.2% over the coming 12 months.

"In the short run, the stock market is a voting machine," said Ben Graham, the father of value investing, "but in the long run, it is a weighing machine."

Graham, who was also the mentor of Warren Buffett, was asserting that over extended periods of time, a stock's price is most influenced by the underlying company's fundamental performance. In that context, profit growth is the main catalyst that can lift share prices in the long term.

This explains why Apple has been such a great stock to own. In the past decade, its EPS has risen at a compound annual rate of 19%.

Of course, a 12-month time horizon is much shorter. Over such a brief period, market sentiment can have a more profound effect on a stock's performance than profit growth. A year from now, Apple's EPS could be 18.2% higher. But there's a good chance that its price-to-earnings ratio, currently at 35.5, will change.

There's a very clear takeaway for investors: Don't buy stocks based on where you think the share price will be in 12 months. Add businesses to your portfolio with a plan to own them for five years or more. That's how wealth is made in the stock market.

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

In the past few days, the price of Bitcoin (CRYPTO: BTC) has soared 21% (as of Aug. 24). The bulls are preparing for the positive market sentiment to continue and lift the world's top cryptocurrency out of its slump and to a new record.

However, Bitcoin continues to face threats, most recently highlighted by the surprisingly weak security of a popular hardware wallet that allowed hackers to steal $130 million in assets. This unfortunate event negatively impacts the public's trust in this digital asset.

Here's what Bitcoin investors need to know.

Image source: Getty Images.

Knowing your private keys isn't enough

In a wave of attacks in late July and early August, it was revealed that the private keys of certain Coldcard wallets were able to be easily derived by malicious actors. Sold by Canadian company Coinkite, these devices implemented weak random number generators to create seed phrases. By brute force, hackers could figure out users' private keys remotely, thereby stealing funds.

Bitcoin supporters who adopt cold storage understand that if they don't know their own private keys, then those digital assets aren't really theirs. However, the Coldcard incident shows that having control of your private keys isn't enough. How those seed phrases are created is absolutely critical.

For what it's worth, Coinkite introduced new firmware to boost security. But it won't be easy to rebuild trust.

Power shifts from individuals to institutions

When the Bitcoin white paper was released in October 2008, the cryptocurrency was introduced to the world to empower individuals financially while undermining the influence of large banking entities. This was a pressing issue at the time, since the financial crisis was still impacting the economy.

Coldcard was revered as one of the most secure hardware wallets on the market. Its existence supported the case that people should take the time to learn how to self-custody their Bitcoin. This perspective is now called into question. Bitcoin's strongest bulls shouldn't be surprised that most people simply don't care to become their own bank.

This shifts power back to the institutions, which goes against Bitcoin's philosophy. The spot Bitcoin exchange-traded funds should benefit, as they offer investors an accessible and convenient way to gain exposure to the digital asset.

As with any new technology, adoption can take off when it becomes seamless for everyday people to use. It's not realistic to expect everyone to put in the time and effort to climb a steep technical learning curve to self-custody Bitcoin. The Coldcard hack punished those who chose this path.

I believe Bitcoin's long-term thesis is intact. However, well-known financial companies will play a bigger role in adoption at the expense of smaller, riskier, and less established product and service providers.

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

Milestones are usually meant to be celebrated, but this achievement isn't necessarily a positive development. The U.S. government's debt balance has officially exceeded $40 trillion. This massive sum is equal to 124% of the country's gross domestic product (GDP), up from a 62% share in 2006.

What's more, the federal debt burden has more than doubled in a decade. Compared to 20 years ago, it has exploded 376% higher. Within the U.S. budget, more money goes to interest payments now than it does to anything else, except Social Security and Medicare.

Here's what history says all of this borrowing means for the stock market. Investors will want to pay attention.

Image source: Getty Images.

The U.S. has a spending problem

When President Donald Trump began his second term, he immediately set up the Department of Government Efficiency. This agency, headed by Elon Musk, was tasked with cutting spending and reducing the deficit. But by any measure, it was a complete failure. Even the world's most prominent tech visionary couldn't make a tiny dent in fixing the country's finances.

This gets to the heart of the situation. It doesn't matter what side of the political aisle you stand on. The U.S. has a spending problem, with the national deficit through 10 months of fiscal 2026 totaling $1.8 trillion.

The spending spree totally makes sense in desperate times. During the Great Recession or the COVID-19 pandemic, which brought the global economy to a halt, the government enacted stimulus measures to get things back on track. However, the debt figure keeps climbing even when we're not in a recessionary period.

There is no end in sight. The Congressional Budget Office expects gross federal debt to reach $64 trillion by 2036. This could end up being a conservative view. The higher the debt becomes, the more interest the country has to pay. Consequently, this unfavorable setup then supports borrowing more money to service existing obligations. It's like a person signing up for a new credit card to pay the bill on an old one.

That $40 trillion figure reflects the level of trust that holders of U.S. Treasuries have in the economy and financial system. The U.S. has the global reserve currency, the world's dominant economy, and the most robust capital markets. This means borrowing and spending can continue longer than people expect.

Investors should be bullish

For investors, this suggests that equity valuations matter less because so much money is being pumped into the economy, distorting market dynamics. Pressure mounts on the Federal Reserve to lower the fed funds rate to make interest payments more manageable. There is a higher chance the central bank will monetize the debt. These are accommodative measures used to pump liquidity into the system.

The result is ongoing currency debasement. In the past decade, the U.S. M2 money supply has grown by 81%, and the dollar's purchasing power has declined by 28% in that time. Consumers worry about sticky inflation.

However, inflationary pressures also find their way into investable asset classes. The stock market has benefited.

Exactly 10 years ago, the S&P 500 index (SNPINDEX: ^GSPC) traded at a CAPE ratio of 26.7. What appeared to be a historically elevated valuation at that time didn't prevent the benchmark from proceeding to generate a total return of 317% over the last decade (as of Aug. 20). Another strong performance could occur.

Right now, the S&P 500 index carries a CAPE ratio of 42.2. In theory, this should be a recipe for poor returns in the coming decade. However, the U.S. government's fiscal mismanagement is perhaps the most powerful tailwind driving the market.

Investors should be bullish.

Neil Patel 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.

With $1.7 trillion in total assets, the Vanguard S&P 500 ETF (NYSEMKT: VOO) is an extremely popular exchange-traded fund (ETF) within the investment community. It provides instant access to the S&P 500 index. And the expense ratio of 0.03% is very compelling.

Even Warren Buffett recommends this fund as a leading investment choice for most people who want exposure to the stock market. Are you looking to buy this ETF? History says it's crucial to know these three things before investing any money.

Image source: Getty Images.

Portfolio concentration

The first thing investors need to know about the Vanguard S&P 500 ETF is that it is extremely concentrated these days. This fund tracks the S&P 500, but this benchmark is heavily skewed toward the world's most valuable businesses. The top 10 stocks in the portfolio make up 38% of the entire ETF. That means the other 490 or so companies fill out the remaining 62%.

Throughout history, there has never been a time when the S&P index was this concentrated. During the dot-com era, the top 10 stocks then represented 27% of the benchmark.

As you would imagine, technology stocks dominate. The information technology sector as a whole accounts for 37% of the ETF. Nvidia, Apple, Alphabet, Microsoft, and Amazon are the leading five positions. As a group, they are squarely in the middle of the artificial intelligence boom. This exposure includes chip manufacturing, cloud computing, enterprise software, and consumer-facing applications.

When buying this fund, you are making a bullish bet on the economic prospects of this revolutionary technology. If this doesn't agree with your line of thinking, then perhaps it's best to allocate your capital elsewhere.

Average return

The last decade has been particularly special from a performance perspective. The Vanguard S&P 500 ETF has generated a total return of 314% over the last 10 years (as of Aug. 19). Had you invested $10,000 back then, you would have $41,400 today, for an annualized rate of return of 15%. From a historical point of view, this fantastic gain is significantly above average.

Since the S&P 500 index was created in 1957 in its current form, the benchmark has produced a yearly total return of around 10%. A starting $10,000 sum would grow to a much lower 159% in 10 years based on this performance.

This means that investors hoping for the past decade's performance to repeat in the next 10 years should probably temper their expectations to avoid disappointment. The main concern today is that the market's overall valuation, as indicated by its cyclically adjusted price-to-earnings ratio (CAPE) of 42, is historically elevated. The CAPE ratio smooths out economic fluctuations to assess longer-term valuation extremes, and its current measure is a warning sign.

Of course, the S&P 500 index could continue its unbelievable run. Passive investment vehicles keep attracting capital, adding huge demand for equities. And the market is being driven by elite tech companies that have tremendous growth potential. However, it's always a good idea not to bank on monster returns. Assume that there will be a reversion to the mean.

Ongoing volatility

The third thing that investors want to keep in mind is how normal volatility is. Major drawdowns are a usual occurrence. Investors shouldn't be surprised at all to experience a correction about every one to two years and a bear market every three to five years. This is par for the course.

In the long run, fundamentals are the key catalysts dictating stock returns. But over any short time frame, investor sentiment is what rules share prices.

This is true even among the most valuable companies. Apple has a market capitalization of $4.6 trillion. Its 52-week high is a notable 54% higher than its 52-week low. And this is for a business that lives in the spotlight.

The Vanguard S&P 500 ETF definitely won't be this volatile. However, it's important to have the right mentality the next time the stock market drops. Remember to always stay on track.

Neil Patel has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

With a share price that has soared 996% in the past five years (as of Aug. 20) and a market capitalization of more than $5.2 trillion, the consensus view among the investment community may be that Nvidia is the optimal way to bet on the artificial intelligence (AI) boom.

However, investors should take a closer look at Meta Platforms (NASDAQ: META), which is in a very advantageous position. Here's one powerful reason that supports the case for why this business might be the best AI stock to buy and hold for five years and beyond.

Image source: The Motley Fool.

Consumers are different from enterprises, supporting ad-based monetization

Anthropic recently revealed it generated $65 billion in annualized run-rate revenue in July, seven times higher than a year ago. It cornered the AI market for enterprises, a smart move.

The ability for AI companies to monetize their products and services via subscriptions is much better when targeting enterprises. These corporate customers are fine paying for AI tools since they can possibly boost employee productivity. It's an operating cost that can potentially drive higher revenue and earnings.

Consumers are different. They aren't known for having a willingness to shell out money for software. They don't want to pay a monthly fee for access to an AI chatbot, either. Only 3% of households were paying for AI tools in February, according to Bank of America Institute.

The logical conclusion is that the best strategy is to offer AI products and services to consumers for free. And then this usage can be monetized through advertising. This plays right into Meta's advantage.

The company has distribution (3.6 billion daily active users across its family of apps), engagement (time spent on Instagram was up double digits in the second quarter), an established ad ecosystem (Ads Manager, Ads Auction, Advantage+), and a vast amount of data. This is why Meta's ad business is so dominant and lucrative.

It seems Mark Zuckerberg is well aware of the impact this revolutionary technology will have on his business. "Over the coming years I think that the increased productivity from AI will make advertising a meaningfully larger share of global GDP than it is today," he said on the Q1 2025 earnings call.

AI will strengthen the flywheel

Meta's management team certainly knows about this monetization opportunity. It makes sense why the company is spending so much money, even though it doesn't have a cloud computing platform like the other hyperscalers. Capital expenditures are expected to total $137.5 billion this year (at the midpoint).

Forget about the business having the opportunity to sell excess compute to outside customers at a premium. Meta is developing its own frontier AI models that can directly benefit exiting operations. This technology can improve the entire advertising flywheel.

There's a feedback loop Meta possesses that can be strengthened with AI. On one side, AI can enhance recommendations and boost engagement. On the other side, AI can provide advertisers with better creative and targeting capabilities, leading to improving return on investment and more ad spending from customers.

Consequently, Meta can collect more revenue. And this entire ecosystem is constantly getting better.

On the engagement front, Meta is working on introducing new consumer AI experiences. The company sees a future in which "billions of people" have personal agents working nonstop to help them achieve their goals. This is part of the overarching vision to introduce personal superintelligence to the world.

Maybe the best opportunity in the AI space doesn't exist at the infrastructure layer. Industry observers argue that as the AI trend progresses, chips, cloud platforms, and AI models will become commoditized.

So, lucrative investments might come from companies that can leverage this impressive technology to improve their current operations. It appears as though Meta is well-positioned to bolster its advertising machine.

Bank of America is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.

The cryptocurrency market, a relatively new asset class, is known to produce huge winners. Investors seeking high-profile opportunities will be drawn to this industry. However, it's important to look at potential investments with an eye toward controlling risk.

Do you have $500 ready to put to work? As we look toward the rest of 2026, here's one cryptocurrency to buy hand over fist.

Image source: Getty Images.

See the present clearly

Wise investors thinking about gaining exposure to digital assets should stick to the most established and proven name. This is Bitcoin (CRYPTO: BTC). It's been around for almost two decades. It has unrivaled brand recognition and network effects. It's not controlled by any single entity. And its market cap of $1.5 trillion, signaling deep liquidity, represents 59% of the overall cryptocurrency industry's value.

Buying this digital asset hand over fist could prove to be an excellent financial move. That's because Bitcoin is trading 41% off its peak (as of Aug. 22). Sentiment is extremely low, which theoretically increases the upside.

It's difficult to pinpoint what's causing the pressure. The investment community remains concerned about the quantum computing threat, and a higher-for-longer rate environment doesn't bode well for risky assets.

There's also intense competition for capital. The artificial intelligence trade, with companies at the center of this boom commanding market caps in the trillions, has attracted significant investor capital and attention.

However, Bitcoin's current downturn is nothing new. The crypto's volatile history follows a four-year cycle of bull-market tops and bear-market bottoms that correspond with the halving events. The last bear market ended in November 2022, which suggests the current bear market will end later in 2026.

It's almost impossible to perfectly time your buying decisions so that the price of the crypto only rises after you get in. Therefore, it's very likely that if you buy Bitcoin today, its price will fall even further.

If this prospect scares you, then it's worth considering dollar-cost averaging. Instead of allocating the entire $500 in one upfront transaction, a better approach might be to break up the purchases. You could invest $100 into Bitcoin on a monthly basis for five months.

Focus on the future

Bitcoin is a long-term asset. Investors shouldn't buy and sell with the intention of capturing a quick profit. Even though it's been around since 2009, Bitcoin bulls believe its story is still in the early innings.

The clearest bull case is that Bitcoin continues on its path to becoming a more widely held store of value. As a decentralized, digital, and predictable monetary network, it is intended to challenge the current fiat-based monetary system. The digital asset's most compelling feature is its fixed supply. Only 21 million units will ever be in circulation.

That makes Bitcoin attractive compared to fiat currencies with unlimited supply. What's more, there is growing concern about the sustainability of sovereign debt levels. In the U.S., the federal debt has now exceeded $40 trillion. And there is no end in sight to the enormous borrowing and spending.

Bitcoin needs market participants with capital, whether they're people, institutions, or governments, to allocate more of their savings to it. This has happened in the past, as the crypto's price has skyrocketed 11,000% in the past 10 years.

While nothing is guaranteed, Bitcoin's sizable upside could turn a $500 investment into much more over the next decade and beyond.

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

Home Depot (NYSE: HD) just reported financial results for its fiscal second quarter (ended Aug. 2). Revenue of $47.9 billion and adjusted diluted earnings per share of $4.92 both came in ahead of Wall Street analyst expectations. Shares were up following the announcement, even though the management team kept guidance unchanged.

The retail stock has been disappointing in the past five years, trading up just 7% during that time (as of Aug. 19). However, it does a fantastic job of returning capital to shareholders. Home Depot currently pays a dividend yield of 2.67%. And it has raised the quarterly payout in 17 straight years, with a dividend going to shareholders in 157 consecutive quarters.

Passive-income investors can rejoice. However, the dividend doesn't matter nearly as much as the Federal Reserve and Kevin Warsh. Home Depot's success depends on favorable macroeconomic conditions.

Here's what investors must know about the industry-leading home improvement chain.

Image source: The Motley Fool.

Blame the macroeconomic environment

During the second quarter, Home Depot revealed that same-store sales (SSS) increased by 1.7%, marking the fastest growth rate in almost four years. The reported figure still isn't anything to write home about. This important metric has been under immense pressure in recent years, even turning negative in fiscal 2023 and fiscal 2024.

Blame the macro environment. Inflationary pressures are forcing the Federal Reserve's hand, as it recently kept the fed funds rate unchanged. The Personal Consumption Expenditures price index, which is the central bank's preferred inflation gauge, is well above the long-run 2% target. Fed Chair Kevin Warsh has signaled to the market that he intends to contain inflation. Companies whose success depends on a more accommodative environment will have to wait for better days.

Home Depot will continue to feel the negative impacts. Housing turnover is low, and mortgage rates are high. This setup discourages more spending activity on upgrades and renovations. These are sizable purchasing decisions, so it makes sense that people are being more discerning, especially when economic uncertainty is elevated.

Until inflation gets under control, which may or may not take some time, it's not easy to be bullish on Home Depot's growth prospects. Interest rates need to come down, and activity in the housing market must pick back up. According to consensus analyst estimates, the company's revenue in fiscal 2028 will be only 12.4% higher than 2025's $164.7 billion total. This is a muted outlook.

Bulls get paid to test their patience

That being said, this is a competitively advantaged business. It's the clear leader in what management estimates to be a massive $1.2 trillion industry. This supports its brand recognition. What's more, a significant revenue base affords Home Depot the ability to invest in new store openings, supply chain and omnichannel capabilities, inventory availability, and labor force.

But its 14% market share underscores the opportunity in front of it to grow revenue at the expense of smaller rivals. One of the most powerful long-term tailwinds for this business is the aging housing stock, as older homes require more upkeep. What's more, there are trillions of dollars in untapped equity due to notable housing appreciation in the U.S. in recent years. This indicates pent-up demand.

Home Depot is a high-quality company whose dividend faces virtually no risk of being disrupted. Profitability is no issue. Despite facing macro headwinds, it still posted $4.8 billion in net income in the latest fiscal quarter. And analysts believe it will generate $16.9 billion in free cash flow this fiscal year. That's materially higher than what its dividend bill will be.

Home Depot won't do much to attract growth-minded investors. However, it is a solid dividend stock. Investors who remain bullish can at least earn a healthy income stream as they wait for the company's financial performance to improve. It's easier to be patient when you're getting paid to do so.

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

If investors want to pick individual companies for their portfolios, more work is required than if they choose to go the passive route. Researching businesses takes time and effort. It's not always an easy process. But curiosity can take you far, especially if you're searching in an exciting industry.

When analyzing a fintech stock, for instance, here are two of the most important factors that investors should look at before coming to an informed conclusion. Upstart Holdings (NASDAQ: UPST) can provide a valuable case study on this topic.

Image source: Getty Images.

Do you understand the business model?

Some of the greatest investors ever, like Peter Lynch and Warren Buffett, focused relentlessly on owning companies that they knew very well. This seems like an obvious requirement, but it's easy to fool yourself into thinking that you have a solid understanding. In the fintech world, many companies look similar. It's critical to figure out their specific business models and how they make money.

There's no denying that Upstart is one of the most exciting companies in this corner of the market. That's probably because it has been working on artificial intelligence (AI) capabilities ever since it was founded more than a decade ago. It's not just hopping on the bandwagon of the latest technological trend.

This business has developed (and continues to improve) an AI-powered credit assessment tool that looks at over 3,000 unique variables about potential borrowers. The objective is to better analyze the default risk, while providing more access to credit to borrowers who might not be approved by traditional lenders. This is a challenger to the entrenched FICO scoring model.

Upstart generates revenue by providing its AI tool to lending partners, including more than 100 banks and credit unions, and collecting fees any time a loan gets approved. The company currently offers personal loans, auto loans, and home equity lines of credit. Now that it's received a bank charter, it's planning to launch Upstart Bank in early 2027, allowing it to accept consumer deposits.

Upstart aims to not keep these loans on its balance sheet, instead offloading them to capital providers. As of June 30, it did carry $1.1 billion in loans on its books. but 94.1% of loans outstanding were held by third parties.

Growth has been volatile. As expected, Upstart is heavily exposed to the changing macroeconomic climate. When interest rates are declining low, demand from borrowers picks up. This drives rapid transaction volume and revenue growth, as was experienced during 2021.

However, when credit conditions tighten, the business's expansion hits the brakes. This is what happened in 2023.

Upstart management is forecasting revenue of $1.4 billion in 2026. This would be 40% higher than last year's total. Maybe the biggest uncertainty is how this company performs over an entire credit cycle. It hasn't yet been tested in a recession (not including the short pandemic-driven 2020 downturn). This presents a risk.

Is the company reporting positive earnings?

Profitability is another key part of judging fintech stocks. These kinds of businesses are generally characterized by fast growth. Their leadership teams invest aggressively in research and development and marketing to capture what they believe to be significant market opportunities. Consequently, reporting positive GAAP earnings is an afterthought in the early stages.

Because Upstart's loan activity and revenue trends have been choppy historically, so too has its bottom-line performance. The business generated $135 million in net income in 2021. It followed with three straight years of operating in the red, with cumulative net losses from 2022 through 2024 of $478 million.

Last year, Upstart turned things around. It posted $54 million in net income.

The encouraging part is that this company has proven that it can report profits. The main question centers on its ability to do so in a sustainable manner.

Once Upstart proves it can grow revenue and net income consistently over a long period of time, the business becomes more attractive as an investment candidate.

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

It goes without question that Peter Lynch belongs in the investor hall of fame. The portfolio manager of the Fidelity Magellan Fund put up a phenomenal 29% annualized return during the 13-year stretch from 1977 to 1990, trouncing the S&P 500 index.

That elite group of capital allocators also includes Warren Buffett. The longevity of his success is impressive, as he directed capital allocation decisions that propelled Berkshire Hathaway shares to a compound annual growth rate of nearly 20% for six decades.

Average investors can lean on the principles of these two legends to find ideas for their own portfolios. The business that does a good job of checking a lot of the boxes that are important to these great investors is none other than Amazon (NASDAQ: AMZN). Let's take a closer look at this "Magnificent Seven" stock through the eyes of Lynch and Buffett.

Image source: The Motley Fool.

Buy what you know

Lynch was an advocate for the individual retail investor. He believed that everyday people could beat Wall Street experts by leveraging their advantage. This means sticking to companies that you know and might be a customer of. It also means identifying businesses in your community that seem to always be busy.

This strategy focuses on first-hand experience. It shies away from fancy spreadsheets and complex financial analysis. He also urged investors to pay no attention to macroeconomic data. Lynch believed that a company worth owning should be simple enough to explain in one sentence.

Amazon is the world's dominant online marketplace. Its website had 2.4 billion visitors in the month of July. Amazon Prime has more than 200 million members. There's a strong likelihood that you shop on Amazon.com on numerous occasions every week or month, as it offers extremely low prices, fast and free shipping, and a massive selection.

Lynch was known for finding 10-bagger ideas. These are stocks that rose more than 10-fold during his holding period. The probability of hitting one of these home runs is higher, of course, with smaller businesses. At a market capitalization of $2.8 trillion, Amazon doesn't pass this test.

Lynch's valuation screen also won't apply. He made famous the concept of growth at a reasonable price, using the price-to-earnings-to-growth (PEG) ratio. Amazon trades at a reasonable PEG multiple of 1.4. A figure under 1 would be a no-brainer opportunity. But in today's market environment, these are rare.

While investors understand the consumer-facing parts of Amazon's business, we can't forget about the most lucrative segment: Amazon Web Services (AWS). The cloud platform is a critical growth and profit engine, and it positions the company in the middle of the artificial intelligence revolution.

The ideal holding period is forever

Warren Buffett's playbook, at least in recent decades, prioritized owning competitively advantaged companies that are within his circle of competence. The stock's valuation must always be compelling.

Furthermore, the Oracle of Omaha's favorite holding period is forever. Two of Berkshire's largest positions, American Express and Coca-Cola, have been in the portfolio for decades.

It's that long-term mindset that supports compounding, which can lead to monster returns if you pick the right company. In the past 20 years, Amazon's stock has skyrocketed 17,720% (as of Aug. 18). This gain isn't going to be repeated in the future. But these shares have plenty of upside in the coming five and 10 years.

Amazon has a wide economic moat. The online marketplace benefits from a powerful network effect, as more merchants and shoppers increase the value the ecosystem provides. AWS also has tremendous scale advantages. And once onboarded, its customers definitely face high switching costs that discourage them from changing cloud providers.

Amazon is one of the highest-quality companies on Earth. It deserves a closer look from investors who think like Lynch and Buffett.

American Express is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, American Express, and Berkshire Hathaway. The Motley Fool has a disclosure policy.

Through the first roughly seven and a half months of 2026, the S&P 500 index has continued proving the bears wrong. The popular benchmark is up 13% this year (as of Aug. 18). This performance comes after double-digit gains in each of the previous three years.

Nonetheless, it seems that people are still worried about the possibility of an economic downturn. A cooling labor market, elevated interest rates, geopolitical risk, trade and tariff uncertainty, weak consumer sentiment, and the artificial intelligence boom are on everyone's mind these days.

It's important that investors are aware of these concerns, especially as they relate to their portfolio positions. Two well-known streaming stocks, Netflix (NASDAQ: NFLX) and Walt Disney (NYSE: DIS), have lost money for shareholders in 2026. But in a recession, one of these companies will hold up better than the other.

Image source: The Motley Fool.

There's a valid case that streaming entertainment is resilient

If the U.S. economy faces an adverse scenario in the near future, consumers will certainly put more effort into stretching their budgets, as they become more discerning about where their money goes. Consequently, they will pull back spending in certain discretionary areas, like eating out, buying luxury goods, or taking vacations.

A strong argument can be made that the streaming entertainment market overall will be resilient in this situation. Given that streaming services are generally viewed as a low-cost leisure activity, consumers could keep their memberships as they spend more time at home. What's more, people can get much more utility from their subscriptions because they allow unlimited viewing.

Netflix dominates the streaming video industry. It had 325 million subscribers at the end of last year. And it's on track to report more than $51 billion in sales in 2026.

But Disney+, Hulu, and ESPN, which are the company's comprehensive direct-to-consumer offerings, also make Walt Disney a leader in media and entertainment. It has a deeper and older content library, supported by its rich intellectual property (IP). Not to mention, Disney also owns valuable sports rights that draw viewers.

In a recession, there's also a chance that more consumers will switch from premium ad-free subscriptions to cheaper ad-supported tiers. Netflix launched this offering in late 2022, and advertising is on pace to generate $3 billion in ad revenue in 2026. Disney+ and Hulu also have ad-supported tiers.

While more people opt for this option, there is a trade-off. The digital advertising market is known to be cyclical, as companies pare back their marketing budgets when consumer spending is under pressure. It wouldn't be surprising to see ad-driven streaming revenue growth slow in a downturn.

Disney's most lucrative segment is exposed to a downturn

Streaming will hold up well in a recession. Unlike Netflix, however, Disney has an extremely lucrative experiences segment that makes the overall business more sensitive to macro-level changes.

During its fiscal 2026 third quarter (ended June 27), Disney generated $3 billion in operating income from experiences. This profit figure represented 54% of the company's total. It is the crown jewel division, which brings Disney's IP to life.

There's no doubt that when times get tough, households will delay taking a trip to a Disney theme park. A seven-day visit to Disney World in Orlando can cost more than $7,000 for a family of four, a number that doesn't include airfare. The company's cruises offer more value than land-based travel. But these can also be very expensive activities that can be put on hold until the economy is in better shape. This could result in a hit to Disney's revenue and profit.

Investors who are more worried about a potentially adverse economic scenario will want to avoid the House of Mouse in favor of Netflix's pure-play streaming model.

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

Investors will definitely find it challenging to complain about the stock market these days. That's because the performance speaks for itself, despite there being an elevated level of uncertainty regarding the state of the economy.

In the past 12 months, there's one Vanguard exchange-traded fund (ETF) that has climbed 23% (as of Aug. 18). This investment vehicle has been outperforming the S&P 500 index during that time. That gain will pique the interest of investors. But history provides a clear suggestion as to what you should be doing with your portfolio.

Continue reading to learn about this ETF. And for what it's worth, it's not the popular Vanguard S&P 500 ETF (NYSEMKT: VOO).

Image source: Getty Images.

Look at the past, and listen to Buffett

Investors should become familiar with the Vanguard Total International Stock ETF (NASDAQ: VXUS). It's having a moment in the spotlight, as it has outpaced the S&P 500 index over the last year.

But this outperformance isn't a long-running trend. It's a new development. In the past decade, this ETF has generated a total return of 149%. On the other hand, the S&P 500 index's total return of 319% is far superior. Credit goes to the impressive success of the Magnificent Seven stocks that have made U.S. investors a lot of money.

This might indicate that the Vanguard Total International Stock ETF's showing is a one-off development and not a durable trend that investors should bet on. History suggests that this is the case.

Warren Buffett also provides investors with some advice. "Never bet against America," he once wrote. He has viewed the Vanguard S&P 500 ETF as the best way for most people to invest in the stock market, emphasizing its low cost (expense ratio of 0.03%) and the fact that most active fund managers produce subpar results.

Buying and holding the international ETF essentially goes against the Oracle of Omaha's recommendation of allocating capital to the U.S. economy. But investors shouldn't completely write it off.

Consider ways to diversify the portfolio

One of the core philosophies of successful long-term investing is to build a diversified portfolio. This is textbook advice that any investor who's new to the stock market will quickly learn. Owning many businesses in various industries that serve different end customers can lower single-stock risk, smooth out the volatility, and make it much easier to stay invested and let compounding work.

However, investors might not have put much thought into geographic diversification. Naturally, domestic investors favor companies in the U.S., as there is a familiarity with these names. You might even be a customer of many of these businesses.

It's important to at least consider gaining international exposure. This is precisely where the Vanguard Total International Stock ETF comes into the picture. Even with a track record of notable underperformance relative to the S&P 500 index, it deserves some attention.

There are high-quality companies in other countries, with Taiwan Semiconductor Manufacturing, Samsung Electronics, and ASML Holding being the top three positions in the ETF. Their combined weight is tiny, but these businesses play a crucial role in the artificial intelligence revolution. Japan is the nation most represented in the international ETF.

Concentration risk is a major topic when it comes to the S&P 500 index, as is the overall market's valuation. Ever-expanding U.S. federal debt, now approaching $40 trillion, is another concern. And the White House's aggressive tariff tactics have aggravated trade partners. These headwinds at least make owning foreign stocks somewhat more interesting.

This supports the perspective that the Vanguard Total International Stock ETF is a worthy investment candidate. It may or may not outperform the S&P 500 index in the coming five or 10 years. However, allocating 5% to 10% of your portfolio here is an effective way to diversify.

Neil Patel has positions in Vanguard S&P 500 ETF and Vanguard Total International Stock ETF. The Motley Fool has positions in and recommends ASML, Taiwan Semiconductor Manufacturing, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

No company has captivated the investment community in the way that Nvidia (NASDAQ: NVDA) has. At an almost $5.5 trillion market capitalization, propelled by a share price that has skyrocketed, it's the world's most valuable business. Nvidia is worth $1 trillion more than Apple, a mind-boggling stat.

This dominant company might have extremely bullish supporters who think the artificial intelligence (AI) stock will 10x in 10 years. Given Nvidia's monster success, it's hard not to be optimistic.

However, I believe there's a cryptocurrency stock that has fallen 50% in 2026 and has a better chance of rising 900% over the coming decade. Here's why.

Image source: The Motley Fool.

Nvidia sits in the middle of the data center boom

In recent years, the economy and stock market have been defined by the AI boom. At a high level, this trend is really about the burgeoning data center build-out. To power the AI models these facilities are built to run, there is a need for the graphics processing units that Nvidia sells. These are the best in the industry, as evidenced by the business's virtual monopoly.

As hyperscalers continue to spend aggressively, Nvidia has been winning. In the fiscal 2027 first quarter (ended April 26), revenue jumped 85% year over year to $81.6 billion. Founder and CEO Jensen Huang expects the business to collect $1 trillion in Blackwell and Rubin sales from 2025 through 2027.

In addition to pricing power, Nvidia has benefited from notable operating leverage. Net income was up 211% last fiscal year.

You'd think the stock carried a wildly expensive valuation. But it only trades at a forward price-to-earnings ratio of 25.6.

Given its impressive competitive position and financial performance, coupled with its attractive valuation, investors will readily gravitate toward this booming stock. Consequently, it makes sense if shareholders believe a 10-fold gain is on the horizon between now and 2036. And a potential 900% return would be peanuts compared to Nvidia's eye-popping 14,280% share-price growth in the past decade (as of Aug. 17).

Strategy is a levered bet on Bitcoin

With its stock price cut in half this year, it might come as a surprise that I think Strategy (NASDAQ: MSTR) (formerly known as MicroStrategy) shares have a better shot at surging 10x. The company is being hammered by the Bitcoin bear market. It owns $54 billion worth of the top digital asset, so its stock typically makes more pronounced moves in the same direction.

Any student of history has figured out that Bitcoin experiences boom-and-bust cycles in four-year waves. Bear markets are always followed by raging bull runs. And past data suggests that the cryptocurrency will reach a bottom late this year before starting its ascent.

This puts Strategy in an advantageous position, since it's a levered bet on Bitcoin. The business model provides a case study in complex financial engineering. What matters most, however, is that Strategy can continue to meet its dividend and interest payments. Even as Bitcoin trades 48% off its peak, this company has handled its obligations.

Investors that aren't bullish on Bitcoin, of course, won't be bullish on Strategy. It's that simple. These market participants will be more compelled to think that there's a higher probability Nvidia will 10x in 10 years. But this implies that the AI enterprise will carry an enormous $55 trillion market cap in 2036 (assuming the share count stays the same). That doesn't seem likely.

Additionally, Nvidia is all-in on the AI craze. Its success going forward and the market's sentiment toward the stock are heavily shaped by the spending boom, which is not only keeping up but also growing in dollar terms. While the company's financial performance has been extraordinary, the hyperscalers' capital expenditures must eventually taper off.

This doesn't mean the stock isn't worthy of investment consideration. It's just that the returns going forward won't come anywhere close to resembling the past.

On the other hand, Strategy is leaning on two durable trends: ongoing currency debasement and greater Bitcoin adoption. It has figured out how to raise fiat currency, which has a limitless supply, and direct it into what is the scarcest financial asset, Bitcoin.

There will be unnerving volatility, and the risk is notable, but this crypto stock has massive upside over the coming 10 years.

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

During the five-year period before they established their all-time record in June 2024, shares of Chipotle Mexican Grill (NYSE: CMG) put on a market-thumping performance. They soared 368% over that time period.

The Tex-Mex restaurant chain has been trying to win back investors. The departure of CEO Brian Niccol in August 2024, coupled with a slower top-line gain last year, hurt sentiment. Shares trade 51% below their peak (as of Aug. 18).

This growth stock recently gave investors some good news. Chipotle reported a same-store sales (SSS) increase of 2.2% in the second quarter (ended June 30). This marked an acceleration from the 0.5% gain from the first quarter. It's an encouraging reversal compared to the 1.7% decline posted for all of 2025.

Here's what this trend means for long-term Chipotle shareholders.

Image source: The Motley Fool.

Traffic trends appear to be stabilizing

For any restaurant or retailer, SSS is a key performance indicator. In Chipotle's case, it measures the change in revenue for locations that have been open for at least 13 months. At a high level, this single metric reveals how well existing stores are doing, stripping away the effect of new openings.

In 2025, Chipotle's SSS fell in three quarters. The exception came in the third quarter last year, when SSS rose by just 0.3%. Like many of its peers, the company was dealing with softer foot traffic as people wanted to find greater value at a time of elevated inflation.

With SSS accelerating, maybe Chipotle is back on track. In Q2, the 2.2% growth was driven by a 1% jump in transaction counts, indicating more visits to restaurants. Check sizes rose 1.2%.

Management even raised its guidance for the full year. The leadership team now expects SSS to grow in the low single digits in 2026, up from the previous forecast of SSS to be flat. What's particularly encouraging about this outlook is that it incorporates a 2% sales dip in the second half of July due to the cyclospora outbreak, even though this health scare affected zero Chipotle locations. A salmonella scare forced Chipotle to remove jalapeños nationwide in early August, causing a 10% price drop.

Chipotle was revered by the investor community because of its strong revenue and profit growth. It hit a rough patch last year, and the market has punished the stock. But the latest data suggests that traffic trends have stabilized and should steadily improve.

The bull and bear case

Since Chipotle's shares trade so far off their record, now is a good time for prospective investors to sharpen their pencils and take a closer look at the restaurant stock's prospects. The bull case is clear.

Chipotle has long operated with a strong industry position and value proposition, driven by its scale and brand. Its profitability is superb, with an operating margin of 14.3% over the last six months. The growth trajectory is also impressive -- management plans to open 350 net new stores per year going forward.

As the financial results over the past several quarters indicate, though, Chipotle is not immune to macroeconomic pressures. There are health risks to be mindful of as well that can affect consumer perception, even if they don't involve the business directly. Of course, the restaurant sector overall is arguably the most competitive industry.

Chipotle's stock is trading well below its peak. Investors can now own the company by paying a price-to-earnings ratio of 31.3. While this multiple is close to a five-year low, it's not cheap enough to drive interest from value investors.

According to consensus analyst estimates, Chipotle's earnings per share are projected to rise at a compound annual rate of 10.5% from 2025 to 2028. In the half-decade period before this forecast, diluted earnings per share (EPS) increased at an outstanding yearly clip of 35.4%, so there is a chance the business will surprise to the upside in the future.

Either way, investors might be hesitant to pay over 30 times profit for the stock.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends the following options: short September 2026 $35 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

Berkshire Hathaway's (NYSE: BRKA) (NYSE: BRKB) most recent 13F was just filed with the Securities and Exchange Commission, and the company made a notable move. During the second quarter, it increased the size of its bet on Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), thanks to the $10 billion private placement in June and open market transactions.

Oracle of Omaha Warren Buffett, who is now chairman of Berkshire after retiring as CEO at the end of 2025, revealed that he initiated this position last year. Combined, the Class A and Class C shares make up the conglomerate's third-largest position, valued at $36.6 billion. It's now larger than the Coca-Cola stake.

Berkshire and Buffett have made it crystal clear just how bullish they have become on Alphabet, whose share price has surged 70% over the past 12 months. Alphabet is one of the major hyperscalers in artificial intelligence (AI).

Image source: The Motley Fool.

Alphabet passes the test

Notably, Buffett led the decision to buy Alphabet during the third quarter last year, although he did discuss the move with now-CEO Greg Abel. Buffett's philosophy has seen him shy away from internet enterprises in the past. This is no longer the case, of course. It's even more interesting that the Alphabet position was started during the ongoing AI revolution.

Berkshire must be optimistic about Alphabet's prospects over the coming five years and beyond. This is easy to believe, given that the business possesses a wide economic moat. There are network effects at play for Google Search and YouTube. Google Cloud has a notable scale advantage, and its customers face switching costs. And valuable intangible assets, such as the Google brand name and the company's ability to collect and leverage data, bolster its competitive position.

Abel must also favor Alphabet's position in the ongoing AI data center boom. Investors are already familiar with Alphabet's capital expenditure (capex) surge, as it now plans to spend $200 billion (at the midpoint) in 2026, with a higher outlay next year. The hyperscalers are sparing no expense to build AI infrastructure.

Rising capex has officially resulted in negative free cash flow (FCF), to the tune of a $5.9 billion loss in the second quarter. It might not be long until sell-side analysts update their spreadsheets to forecast that Alphabet will post negative FCF for the full year.

Alphabet is a wildly profitable company on the income statement, despite the massive hit to its FCF. Its operating margin over the first six months of 2026 was a superb 35%. And its balance sheet has $242 billion in cash, cash equivalents, and marketable securities.

Buffett wouldn't have made a sizable capital outlay if he didn't appreciate Alphabet's financial position. This tells me that Berkshire's investment team believes it can accurately predict Alphabet's FCF well into the future. Buffett and Abel must have concluded that the multi-hundred-billion-dollar capex plan will generate a satisfactory return on invested capital.

This AI stock has gotten cheaper

Over the past year, Alphabet shares have soared 70%. After a fantastic gain like that, investors are forgiven for assuming the stock is expensive now. This isn't the case, though. You'd be surprised to learn that the valuation has become cheaper. The AI stock trades at a price-to-earnings (P/E) ratio of 17.4 today. This multiple has declined by 20% in the last 12 months.

One of Warren Buffett's core investing guidelines is never to overpay for any company. Buying at an attractive valuation is preferred. Alphabet shares are at a P/E ratio that's 34% below the S&P 500's multiple.

Berkshire Hathaway will file its next 13F in about three months. When this happens, the world might find out that it further added to its Alphabet stake in the current quarter. The conglomerate certainly has enough cash on hand to do so.

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

It's hard for Ford Motor Company (NYSE: F) to escape the cutthroat nature of the mass market car industry. Plus, changing macroeconomic conditions can make things difficult. It seems that consumer confidence, interest rates, and gas prices have worked against the business at times. This helps explain why, over the past four years, the share price has fallen 12% (as of Aug. 17).

But Ford has benefited from heightened investor interest recently. The automotive stock has climbed 23% in the past 12 months. Investors are bullish on Ford Energy, a new segment announced in May that plans to sell battery systems to various customers, capitalizing on the surge in demand for grid storage.

Maybe the winning performance will continue for investors. Or perhaps this company will keep lagging the overall market, as it has historically.

Can Ford stock reach $30, up 114% from its current price of about $14, by 2030?

Image source: The Motley Fool.

Ford spends a lot of money to not grow much

Investors shouldn't mistake Ford's longevity, having been in operation for well over a century, as a sign that this is a high-quality company. The Oracle of Omaha's thinking shapes this perspective.

Warren Buffett, who many consider the greatest capital allocator ever, is known for favoring so-called compounders. These businesses have ample opportunities to reinvest capital in growth initiatives. And they do so because they can generate high returns on invested capital. This is part of the recipe that supports long-term shareholder returns.

Ford doesn't belong in this category. The company has to spend meaningful sums just to stay in place. During the 10-year period from the start of 2015 through 2025, Ford's capital expenditures totaled $81 billion. Its automotive revenue increased by only 23.8%, or $33 billion, over that time.

This view is further supported by Ford's push into electric vehicles (EVs). To be fair, the business did launch popular models such as the Mustang Mach-E and F-150 Lightning. However, it undoubtedly overextended itself, investing in a completely new product line just to keep pace with moves made by legacy and upstart peers who were convinced that the industry was rapidly transitioning away from gas-powered vehicles to battery-powered ones. But this shift is taking longer than Ford's capital outlays suggested.

Ford's Model e segment posted a cumulative operating loss of $9.9 billion in 2024 and 2025. And in December 2025, the company announced a $19.5 billion write-off to reset its EV strategy. "The operating reality has changed, and we are redeploying capital into higher-return growth opportunities," CEO Jim Farley said. This was a costly mistake.

An unfavorable operating model like this drastically reduces the probability that the stock will reach $30 in four years.

Investors can't bank on the energy segment and cheap valuation being notable catalysts

As mentioned, Ford announced a new energy segment to capture robust demand for grid storage solutions, mainly driven by the data center boom. This looks like a wise move. Management is leaning on Ford's EV-related assets and capacity to take advantage of market trends to boost sales and profits.

However, investors should temper their expectations. This new division isn't going to contribute significantly to the company's financial performance.

According to Morgan Stanley, Ford Energy will generate $500 million to $600 million in annual earnings before interest and taxes (EBIT) at scale. The high end of that forecast equates to just 5.7% of the company's overall 2026 guidance for adjusted EBIT.

Ford bulls will highlight the stock's cheap valuation. Shares trade at a forward price-to-earnings ratio of 8. In theory, this introduces upside, as upbeat financial results could move the stock higher. Ford is a subpar business, though, which means it should trade at a low multiple.

Ford shares have been on a hot streak in the past 12 months. This sort of thing can always happen in the stock market, as sentiment constantly shifts over short-term periods.

But the long-term trend is undeniable. Shares have lagged the S&P 500 index by a considerable margin over the past 30 years. This should guide a bearish view among investors. I'd bet that Ford won't reach $30 by 2030.

Neil Patel 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.

At the end of July, SoFi Technologies (NASDAQ: SOFI) reported second-quarter financial results. There is really nothing to complain about. All signs still point to a business that's firing on all cylinders, as it continues to find tremendous success in the competitive and vast financial services industry.

But one number stands out. Here's the single data point that matters most in the coming year for investors in this popular fintech stock.

Image source: Getty Images.

Pay attention to the bottom line

When it comes to earnings season, it's extremely difficult to identify one number that investors should focus on. Businesses blast their shareholders with a firehose of information, which requires having the ability to identify the key variables.

Furthermore, investors shouldn't be thinking only about the next 12 months. It's best to own companies with at least a five-year time horizon, letting the fundamentals do the work to compound share prices.

Still, I believe profit growth is perhaps the most critical metric to follow when tracking SoFi's performance in the coming year. It provides a window into how the business is doing. And this figure is what drives stock returns over time.

Adjusted net income soared 65% year over year to $160 million in Q2. This translates to a net profit margin of 13%. The fourth quarter of 2023 was the first period that SoFi started reporting positive earnings under generally accepted accounting principles (GAAP). That wasn't a one-off event. The company's bottom line has exploded, supporting the perspective that SoFi is a quality enterprise.

Customer growth has been the main catalyst. SoFi added 1.1 million customers in the most recent quarter, bringing the total to 15.8 million. This led to deposit and lending growth, bolstering revenue gains. The top line, which came in at $1.2 billion in the second quarter, set a quarterly record.

That gives SoFi a budding scale advantage. It doesn't operate physical bank branches, allowing the business to avoid costly overhead. And as its offerings increase, it has more opportunities to cross-sell products to its customers, further aiding in monetization. Like larger financial institutions, SoFi could start to benefit from switching costs as it deepens its banking relationships with individual consumers.

A winning return in 12 months isn't guaranteed

As is the case with virtually any company, investors want to see higher profit over time. Warren Buffett wrote in his 1996 shareholder letter that the objective is to own businesses "whose earnings are virtually certain to be materially higher five, ten and twenty years from now."

According to the leadership team's outlook, SoFi's adjusted earnings per share (EPS) are projected to rise at an annualized pace of 40% (at the midpoint) from 2025 to 2028. This kind of growth is spectacular. It's even more impressive in the financial services industry, a mature, established, and slow-changing market. SoFi has successfully carved out a niche as an up-and-coming digital platform.

Investors must watch EPS trends to ensure the thesis remains intact. Rising profits and a favorable competitive position, however, don't guarantee that the fintech stock will produce a positive return in the next 12 months. The valuation plays a huge part when dealing with such a short time frame.

As of this writing, SoFi shares trade at a forward price-to-earnings ratio of about 30. I believe this is a very reasonable multiple to pay for a booming business. But the market has a different take. Despite strong financial results, the stock price is 39% below its peak (as of Aug. 18). Shares have tanked 32% in 2026, while the S&P 500 index has climbed more than 12%.

SoFi can't control the investment community's sentiment. But it can keep expanding its customer base, increasing revenue, running with operational and risk discipline, and raising profit. That last point is what matters most.

Neil Patel 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.

Nu Holdings (NYSE: NU) is a leading digital banking platform in Latin America. Although it sports a market capitalization of $71 billion, there's a good chance that U.S. investors haven't heard of the company. But it's a smart move to get familiar with Nu, as it has been a major disruptor in a big market.

This business is operating at an impressive level. It added 4 million customers last quarter, bringing the total to 139 million users, with 118 million in Brazil, its home market. Is the fintech stock priced for this growth?

Image source: Getty Images.

Nu's trajectory is characterized by rapid revenue and profit gains

Nu's most recent financial results gave investors plenty of reasons to be bullish. During the second quarter, the company reported revenue of $5.9 billion, up 39% year over year on a currency-neutral basis. A higher customer count is the main driver of top-line gains.

It's important to pay attention to the unit economics here. Nu's monthly average revenue per active customer (ARPAC) increased 22% year over year to $17.10 in Q2. User growth will naturally decelerate as Nu scales, but it's extremely encouraging to see improved monetization from the existing customer base, likely due to cross-selling.

There might be no more powerful catalyst lifting this business than the fact that Latin America has a large unbanked and underbanked population. And Nu is capturing the opportunity. For instance, 35% of its customers in Mexico have never had a bank account. And 52% of customers never had a line of credit. This is what disruption looks like.

Nu's deposit base has also exploded, going from $18 billion in Q2 2023 to $45.3 billion today. This provides the funding to power it lending business. Deposits often are sticky, supported by high switching costs for customers.

Profitability is robust. Net income surged 49% to nearly $1.1 billion, exceeding $1 billion for the first time ever. And the net profit margin was 18.1%, better than the 16.4% posted in the second quarter of 2025.

Going back to the unit economics, it costs Nu on average $1 per month to serve each customer. That's only 5.8% of the ARPAC. What's more, the efficiency ratio, a bank's measure of operating expenses relative to net interest income and fee income, was 20% in the second quarter, down from 50% four years ago. A lower number is better, demonstrating improving operating leverage.

Shares aren't trading at an expensive valuation

As of Aug. 18, Nu shares trade 23% below their peak, a high-water mark established in January. They have fallen 14% just this year. However, the stock has risen by more than 80% during the past 36 months, bypassing the S&P 500 index over the same period.

It still trades at a compelling valuation. Investors can buy Nu at a forward price-to-earnings ratio of about 20. The business is growing rapidly, but it doesn't appear that the market is fully appreciating the growth story. This is a compelling setup for prospective investors.

There are risks to be aware of, though. Operating in Latin America, a developing region with volatile currencies, commodity-based economies, and unstable political and regulatory backdrops, introduces greater uncertainty. This is particularly true for a lender. Macroeconomic conditions in Latin America often are less stable than in the U.S.

Furthermore, Nu's $39 billion credit portfolio deserves some attention. Of this figure, 66% is credit cards, and 26% comes from unsecured loans, two product lines with a higher-risk profile. Non-performing loans, those that were 90 days or more past due, stood at 6.9% as of June 30. This metric has steadily increased during the past few years, but management doesn't appear too concerned.

Still, I believe it's worth considering Nu as an investment. Strong growth and a low starting valuation can result in winning returns.

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

Since Tim Cook became CEO of Apple (NASDAQ: AAPL) in 2011, taking over for the legendary Steve Jobs, the company's share price has skyrocketed 2,180% (as of Aug. 17). This was an extremely successful tenure. But it's time to hang it up. The tech executive will step down on Sept. 1 and become executive chairman. He'll be replaced by John Ternus, a 25-year Apple veteran who's currently the hardware chief.

Cook's final earnings call for Apple's fiscal 2026 third quarter, which ended June 27, was on July 30. It happened the same week the business reached a $5 trillion market cap, though that valuation has fallen to $4.5 trillion today, driven by a post-earnings sell-off.

Apple remains one of the most valuable and dominant enterprises on the planet, which makes things easier for its successor. Here's what investors should watch as Ternus takes over the CEO role.

Outgoing Apple CEO Tim Cook. Image source: Apple.

Does Apple need to introduce a new game-changing device?

This is where Ternus' background in hardware could shine through. The biggest question has long focused on the company's ability to introduce a new product line that can drive financial results. This is a difficult task, given Apple's massive revenue base.

For what it's worth, Apple is working on a foldable phone, an artificial intelligence (AI) pin, and smart glasses, as it leans into a forward-thinking mentality. Maybe one of these ideas will break through. But it might not be necessary for Ternus to do too much early on.

Sales of the iPhone, which remains the flagship device, rose more than 20% year over year in each of the last three fiscal quarters. This has occurred despite Apple not yet launching its updated Siri voice assistant.

Will Apple adjust its capital allocation policy?

Through the first nine months of fiscal 2026, Apple paid $11.8 billion in dividends. On the other hand, its share repurchases totaled $62.1 billion. During his tenure, Tim Cook oversaw a mind-boggling $877 billion worth of stock buybacks. This has been the hallmark of Apple's capital allocation policy for more than a decade.

Now that Ternus will soon be in charge, maybe he will decide to direct more of the company's cash toward research and development projects or mergers and acquisitions. This relates in part to the previous point. Ternus could become much more aggressive than Cook was in trying to find the next major product form factor and end up diverting financial resources from returning capital to shareholders.

Can Apple Intelligence strengthen the ecosystem?

The last factor investors should watch is how the company's AI playbook, known as Apple Intelligence, evolves. Critics have called out the business for falling behind its big tech peers, which are spending large sums on infrastructure. Ternus could have greater conviction on where to invest in the AI trend, taking a more urgent approach than the company has historically been known for.

For Apple, though, it all comes down to how this technology could strengthen its already robust ecosystem. Ternus probably understands that the business doesn't need to do anything wild. Apple can lean into its unrivaled brand power, customer loyalty, and hardware/software adeptness to widen its economic moat. AI is just a tool to support that goal.

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

For decades, Nike (NYSE: NKE) has operated as a leader in the global market for sports footwear and apparel. But that winning position has come under fire in recent years. The brand known for inspiring, empowering, and motivating its customers has failed at doing just that for its investors. As of Aug. 14, shares trade 77% below their peak from November 2021.

It's hard to get excited about the company's prospects when it's in the middle of a multi-year turnaround in an intensely competitive industry. However, the consumer discretionary stock might pique the interest of investors seeking a nice income stream they can depend on.

Nike currently boasts a dividend yield of 4%. And the business is on track to make 2026 the 25th straight year that the quarterly payout will be raised.

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Taking care of shareholders through the ups and downs

Last November, Nike raised its dividend payout for the 24th consecutive year. It bumped the quarterly distribution to $0.41 per share, which equates to $1.64 on an annualized basis. Since the share price has cratered, the yield has gotten a boost. Compared with the S&P 500 index's 1.03% dividend yield, the sportswear giant offers investors nearly four times the cash return.

It's likely that another hike will be announced later this year. Historically, Nike has implemented a dividend payout increase in November. If the trend continues, the business will officially be recognized as a Dividend Aristocrat®, a group of S&P 500 companies that have a 25-year (or longer) dividend-raise streak alive.

It's easy to consistently increase the dividend when financial performance is stellar, as profits and free cash flow should support capital returns. It's impressive when businesses do this. It's even more remarkable, on the other hand, to see Nike's leadership team remain committed to shareholders during a multi-year stretch of notable headwinds and relentless competitive pressures.

After 32-year Nike veteran Elliott Hill took the CEO position in October 2024, management has made efforts to improve product innovation and freshness, right-size distribution to balance wholesale and direct-to-consumer channels, and bolster the brand, all while bringing sports back into the center of the strategy. But progress is taking time. The share price has tanked 50% since Hill took over.

In the past three fiscal years, though, Nike has paid $6.9 billion in cumulative dividends. This is a notable sum that's equal to 11% of the company's market capitalization.

Passive income for investors bullish on Nike

Nike's revenue is projected to fall 1.5% in fiscal 2027 on a year-over-year basis. Over the next two years, this key financial metric is expected to grow by less than 4% annually. These estimates are based on consensus figures from the sell-side analyst community.

This outlook makes it extremely difficult to be bullish on Nike and view it as a compelling portfolio addition right now. That perspective is supported by the stock's precipitous decline.

However, it wouldn't be surprising to learn that some investors are still optimistic. After all, this is one of the world's most recognizable consumer brands. This introduces an invaluable intangible asset that Nike's peers don't have.

And now that it appears the company's financial performance has stabilized, there's less risk that the dividend streak will be disrupted. Nike reported $3.1 billion in net profit in fiscal 2026, and it has $9 billion in cash, cash equivalents, and short-term investments on its balance sheet.

If you're bullish on Nike's ability to return to healthy and sustainable revenue and earnings growth sooner rather than later, this setup is interesting, particularly given that the price-to-earnings ratio is near a 10-year low. Of course, your patience will be tested. But you can sit back, relax, and earn a 4% dividend yield while you wait for the business to improve, which could take longer than expected.

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

Meta Platforms (NASDAQ: META) has been on a notable winning streak. In the past three years, shares in the social media and digital advertising empire soared 95% (as of Aug. 14). Consequently, the company's market capitalization expanded by almost $800 billion.

It's still hard to look past the valuation. The "Magnificent Seven" stock trades at a forward price-to-earnings (P/E) ratio of 19.7. This setup should at least be intriguing for investors looking to own a leading technology business. It's a good idea to start digging deeper.

As we look ahead to the next three years, there are key bull and bear cases that could impact Meta Platforms' shareholder returns.

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Revenue surge will lead to higher free cash flow

This company's revenue growth has been accelerating. Sales were up 15.7% in 2023, 21.9% in 2024, and 22.2% in 2025. Analysts expect the top line to increase by 26.5% in 2026.

At Meta's already massive scale, this is impressive. It indicates the benefit of operating in the digital world, where there is seemingly endless growth potential. The stellar performance is supported by a continuously expanding user base, which is at 3.6 billion daily active users.

Meta's biggest bull case is that fantastic revenue growth will continue in the coming years. There's a feedback loop at play. More users and engagement drive greater ad impressions and pricing. And the network effect gets stronger over time.

In the near term, revenue could be boosted by Meta's plan to sell excess compute capacity to third-party customers. It's hard to know how much of an impact this will have, though.

Founder and CEO Mark Zuckerberg also thinks his business is staring at a major opportunity to introduce new artificial intelligence (AI)-powered agents, experiences, and tools to both enterprises and consumers. Additionally, he envisions a scenario five years from now in which billions of people will be using personal AI agents.

The bull case also rests on the belief that Meta's free cash flow (FCF) will surge again. This figure tanked 91% in the second quarter. But the optimistic view is that it's only a temporary hit as the business invests aggressively in AI capacity.

The AI capex boom will prove to be wasteful capital allocation

Meta can be a polarizing stock. The AI capital expenditure (capex) boom separates the divide even further. After capex totaled $39 billion in 2024, it jumped to $72 billion in 2025. And it's projected to be between $130 billion and $145 billion in 2026.

The trend is clear: There's a high likelihood that spending will continue to rise in the coming years.

What was once an extremely attractive, capital-light business model has now become a capital-intensive operation. As a result, FCF could turn negative this year. The bears question when the bleeding will stop. The clear risk is that the AI data center revolution will prove to be a gigantic waste of capital.

At the current valuation, Meta's management team might be inclined to aggressively repurchase shares, returning capital to investors and lifting earnings per share. But buybacks have been halted this year.

A lot of attention goes to the headline capex projections, with almost no discussion about Meta's other obligations. As of June 30, the business had $349 billion of contractual commitments, up from $28 billion a year ago. These don't appear on the financial statements.

The data might not show it yet, but end-user AI demand from both enterprises and consumers could slow. These customers eventually need to move from the experimental phase to actually seeing AI produce measurable revenue and/or profit growth (for enterprises) and tangible daily benefits (for consumers). What if AI isn't all that it's cracked up to be?

Meta in the middle

As with many things in life and investing, reality will end up somewhere between the bull and bear cases. In three years, Meta could start to see its FCF bounce back. However, its immense spending spree could also be a misallocation of shareholder capital. Time will tell.

Meta is clearly one of the world's most outstanding businesses, a view solidified by its enormous user base, network effect, and robust profits. At the current forward P/E multiple of 19.7, it's easy to recommend buying the stock. It's just essential that investors understand how much the thesis rests on how the AI boom evolves, a wildly uncertain outcome.

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