Archives

During the recent third quarter of 2024, Amazon said AI revenue within AWS grew by a triple-digit percentage compared to a year ago, and it’s growing more than three times faster than the cloud division did at the same stage of its evolution.

Berkshire invested in Amazon stock in 2019, and Buffett has expressed regret for not identifying the opportunity sooner. Even though it represents only 0.7% of the conglomerate’s portfolio, it could still deliver spectacular returns over the long run thanks to AI.

Berkshire acquired 400 million shares in Coca-Cola (NYSE: KO) between 1988 and 1994 at a cost of $1.3 billion. It still holds all of them, and they are now worth $24.7 billion! AI certainly wasn’t on Buffett’s mind when he decided to invest in the soda giant back then, but it’s playing an increasingly important role in the business today.

Last year, Coca-Cola appointed a chief of generative AI. So far, the company has used the technology to create marketing campaigns and make a promotional version of its flagship soda called Coca-Cola Y3000. It captures what the drink might taste like in the year 3000 by using AI to analyze high volumes of customer data.

Back in April, Coca-Cola also struck a five-year $1.1 billion deal with Microsoft Azure to improve its supply chains, marketing, and productivity.

Apple (NASDAQ: AAPL) is Berkshire’s largest holding. The stock used to account for almost 50% of the conglomerate’s entire portfolio, but Buffett sold more than half of his position during the first three quarters of 2024. We don’t exactly know why, but Buffett has mentioned at least part of the reason for selling was that he thinks the capital gains tax could rise in the future, so it’s beneficial to take profits now.

The timing is certainly interesting. On the one hand, the S&P 500 is expensive right now with a price-to-earnings ratio (P/E) of 25.6, which is a 41% premium to its long-term average of 18.1. On the other hand, Apple is on the cusp of realizing an enormous opportunity within the AI space, which could fuel a significant device upgrade cycle over the next few years.

The company recently started rolling out its Apple Intelligence software in the latest versions of its iPhone, iPad, and Mac computer lineup. It was developed in partnership with OpenAI. It allows users to summarize messages and emails with a single tap, and it can generate text and images. Plus, Apple’s Siri voice assistant will now draw on the knowledge of OpenAI’s ChatGPT, which will make it more powerful than ever.

Although Berkshire has been a heavy seller of Apple stock lately, Buffett expects it to remain the conglomerate’s largest holding for now. Therefore, the investing legend is still likely to do very well if Apple’s AI efforts pay off.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $380,291!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,278!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $484,003!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 18, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Domino’s Pizza, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

32.4% of Warren Buffett’s $292 Billion Portfolio Is Invested in 4 Artificial Intelligence (AI) Stocks was originally published by The Motley Fool

Given that demand, the runway ahead is long. Analysts at Goldman Sachs Research estimate the market for AI could top $7 trillion by 2030. Furthermore, thanks to the improving economy, businesses are more willing to invest in this new and revolutionary technology, a trend that will benefit Nvidia.

The growing adoption of AI is clearly Nvidia’s biggest opportunity, but there are others.

Before the advent of AI, gaming had long been Nvidia’s primary growth industry. That changed over the past few years when its dominance was usurped by AI. The segment still represents 10% of Nvidia’s revenue, and it could see significant upside now that the economy is on the mend. Inflation took a toll on the gaming business, as users made do with their existing graphics cards, biding their time until conditions improved. Now, many industry experts believe pent-up demand is about to be unleashed, causing a long-awaited upgrade cycle, especially as we head into the holiday season.

In the second quarter, Nvidia captured 88% of the discrete desktop GPU market, according to Jon Peddie Research. While the industrywide third-quarter results aren’t yet available, Nvidia’s dominance isn’t expected to change. Furthermore, demand for videogame processors is expected to surge over the next five years, jumping from $3.6 billion in 2024 to $15.7 billion by 2029, a compound annual growth rate (CAGR) of 34%, according to Mordor Intelligence. As the leading provider of cutting-edge gaming processors, Nvidia is likely to benefit from these secular tailwinds.

Let’s not forget the data center market, which was already experiencing robust growth thanks to the digital transformation. As the demand for cloud computing grows, so too does the need for data centers to support that growth. Nvidia controls an estimated 95% of the data center GPU market, according to CFRA Research analyst Angelo Zino. Furthermore, it’s estimated that the data center market will more than double, climbing from $302 billion in 2024 to $622 billion by 2030, a compound annual growth rate of 10%, according to Prescient and Strategic Intelligence Market Research.

While generative AI is making all the headlines, there are established branches of AI that are powered by Nvidia’s processors — including machine learning. The company dominates an estimated 95% share of that market, according to New Street Research.

Nvidia’s dominance and the expectations for continued growth in each of these markets give the company plenty of additional low-hanging fruit to pluck.

Nvidia currently sports a market cap of roughly $3.58 trillion, which means it will take stock price gains of 179% to drive its value to $10 trillion. According to Wall Street, Nvidia is poised to generate revenue of nearly $126 billion in fiscal 2025 (which ends in January), giving the stock a price-to-sales (P/S) ratio of roughly 28. Assuming its P/S remains constant, Nvidia would need to grow its revenue to roughly $352 billion annually to support a $10 trillion market cap.

Wall Street is currently forecasting revenue growth for Nvidia of 47% annually over the next five years. If the company can achieve that benchmark, it could achieve a $10 trillion market cap as soon as 2028. While that might seem ambitious, I’m not the only one who believes it’s only a matter of time. Beth Kindig, CEO and lead tech analyst for the I/O Fund, calculates that Nvidia will reach a $10 trillion market cap by 2030:

We believe Nvidia will reach a $10 trillion market cap by 2030 or sooner through a rapid product road map, its impenetrable moat from the CUDA [Compute Unified Device Architecture] software platform, and due to being an AI systems company that provides components well beyond GPUs, including networking and software platforms.

Given the multiple paths for growth ahead and the rapid and accelerating adoption of AI, I think Kindig has done her homework.

That said, Nvidia isn’t for the faint of heart. This past summer, the stock plunged 27% in just six weeks between June and July as reports suggested the launch of its AI-centric Blackwell chips could be delayed. Cooler heads have prevailed since then, and the stock has run to new heights. But the lesson stands.

Wall Street expects Nvidia to generate EPS of $4.20 in fiscal 2026, which begins in late January. That works out to roughly 33 times forward earnings (as of this writing). I think that an attractive price to pay for a company supplying the gold standard processors needed to power one of the most important technology shifts in a generation.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $380,291!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,278!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $484,003!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 18, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Goldman Sachs Group, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Meet the Supercharged Growth Stock Poised to Hit $10 Trillion By 2030 According to 1 Wall Street Analyst was originally published by The Motley Fool

Where TransMedics Group reported a net loss of $25.4 million one year ago, the recent quarter saw it generate net income of $4.2 million. Management is also forecasting anywhere from 76% to 84% revenue growth in the full year 2024 compared to 2023. Investors who want to become part-owners in an innovative business disrupting the multibillion-dollar global transplant market might want to take a second look at this healthcare stock.

Shopify (NYSE: SHOP) has built an explosive global footprint since the company was first founded nearly two decades ago. The company controls about 10% of the global e-commerce software market and is the largest e-commerce software platform in the U.S. with a market share of roughly 30%.

Bear in mind that the U.S. e-commerce market is valued north of $1 trillion. It is the largest e-commerce market in the world second only to China. Shopify’s market opportunity is only growing both in its core North American markets and internationally as the global e-commerce industry expands.

In the third quarter of 2024, Shopify reported its fifth consecutive quarter of gross merchandise value (GMV) growth, which is the total value of merchandise sold in a given period. Gross payment volume (GPV) is also accelerating at a rapid clip. Its operating income more than doubled in Q3, while revenue growth accelerated 26% year over year to $2.2 billion.

Shopify’s suite of software and hardware solutions are known for integrations with a wide range of offerings from its global partner ecosystem. However, its own in-house solutions, such as Shopify Payments (a payment processing service for merchants) and Shop Pay (a seamless checkout option for customers) are proving to be key growth drivers.

Case in point: The Shopify Payments offering processed $43 billion in GPV in the third quarter of 2024, a whopping 31% increase from one year ago that accounted for 62% of overall GMV. As for Shop Pay, this product offering processed $17 billion in GMV in Q3, a 42% year-over-year increase that comprised 41% of GPV.

Shopify remains very profitable, with Q3 operating income soaring 132% to $283 million and net income rising 15% from one year ago to $828 million. It also delivered a 19% free cash flow margin, with total free cash flow exploding 53% year over year to $421 million. While some investors may shy away from e-commerce given the current growth environment, Shopify is proving that it’s a comeback kid. It definitely isn’t too late to snag some shares that can compound your returns generously over the next five or more years.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $380,291!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,278!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $484,003!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 18, 2024

Rachel Warren has positions in Shopify. The Motley Fool has positions in and recommends Shopify and TransMedics Group. The Motley Fool has a disclosure policy.

2 Hypergrowth Stocks That Are Screaming Buys in November was originally published by The Motley Fool

The celebrated financier and his team are also well aware that we’re in a world in which travel has been hotly popular, supporting strong demand from the commercial airline segment. Meanwhile, wars and rising tensions in global hot spots boost the defense sector’s business.

It doesn’t hurt that Heico is also a consistent and reliable dividend payer, having paid semi-annual distributions 92 consecutive times since 1979. The catch is that the company’s dividend yield is rather low, at less than 0.1%.

Berkshire first loaded up on Heico in the second calendar quarter of this year, amassing a slightly over 1.04 million share stake in the company valued at just over $185 million at the end of that period. It topped this off with a small buy of 5,445 shares the following quarter, at the conclusion of which the full stake in the rising-star stock was worth nearly $214 million.

It’s notable that while the third-quarter purchase was quite small, it was one of only three equity buys Berkshire made during the three-month stretch. Buffett and his crew were far more busy selling stock than purchasing it, with “only” $1.5 billion in buys against $34.6 billion in divestments. So the fact that it considered adding to that Heico stake at all strongly indicates a high regard for the company.

I think that’s entirely justified. Heico has demonstrated clearly that it is a very competent, capable business that serves its various client bases well. It’s also in a sweet spot where not one, but two of those bases (airlines and defense companies) are currently experiencing timely upswings. The dividend yield could be higher for sure, but that’s hardly a dealbreaker. Like Berkshire, I believe Heico stock is a buy these days.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $380,291!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,278!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $484,003!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 18, 2024

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

Warren Buffett Just Bought More of This Top-Secret Winner That’s Up 51% in 2024. Should You Buy Too? was originally published by The Motley Fool

Consequently, the new spot Bitcoin ETFs have already unlocked substantial demand among retail investors and institutional investors, such that several experts have called them the most successful ETF launches in history. In particular, the iShares Bitcoin Trust stands out. It hit $10 billion in assets faster than any ETF on record, according to The Wall Street Journal.

Institutional investors have contributed heavily to that trend. The number of institutions holding a spot Bitcoin ETF increased from 965 to 1,100 between the first and second quarters of 2024, such that they are “being adopted by institutions at the fastest rate of any ETF in history,” according to Matt Hougan, chief investment officer at Bitwise.

That has colossal implications for Bitcoin’s future price trajectory. Institutional investors have about $120 trillion in assets under management, and allocating even a small fraction of that sum to Bitcoin could drive its price much higher. Indeed, Cathie Wood at Ark Invest thinks institutions will eventually allocate “a little more than 5% of their portfolios to Bitcoin,” driving the price of a single Bitcoin to $3.8 million.

In November 2024, the Nasdaq Stock Exchange introduced options trading on the iShares Bitcoin Trust, a milestone that provides another catalyst to institutional adoption. Options contracts afford the holder the right (but not the obligation) to buy or sell securities at a predetermined date and price.

One important application of options trading is the hedging of long positions. For instance, institutional money managers with positions in the iShares Bitcoin Trust could protect their portfolios from a potential Bitcoin crash by purchasing put options, which afford the holder the right to sell a security at a specific price during a predetermined period.

Spot Bitcoin ETFs have already boosted institutional demand for Bitcoin, such that the cryptocurrency’s price has surged 111% since the new funds hit the U.S. market in January. And demand for spot Bitcoin ETFs could continue to build as institutions incorporate options into their trading strategies. That could drive Bitcoin’s price even higher in the coming years.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $380,291!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,278!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $484,003!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 18, 2024

Trevor Jennewine 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.

Bitcoin Is Doing Something It Has Never Done Before, and It May Lead to Big Gains was originally published by The Motley Fool