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Microsoft (NASDAQ: MSFT) is a king of reliability, known for its consistent financial and stock growth. Over the last five years, the company’s share price has risen 200%, while free cash flow has climbed 92%.

Microsoft’s steady growth has secured it a market cap above $3 trillion, allowing it to remain in the world’s top three most valuable companies. In fact, from about February to June of this year, Microsoft temporarily surpassed Apple and Nvidia (NASDAQ: NVDA) in market cap, taking the top spot.

Market fluctuations have seen the world’s top five most valuable companies reshuffle multiple times in 2024. Even throughout August, Nvidia and Microsoft have been duking it out for second place on an almost weekly basis. Meanwhile, Amazon (NASDAQ: AMZN) appears to be on a bull run that could surpass the Windows company in the coming years.

Nvidia and Amazon have been on exciting growth paths thanks to skyrocketing earnings. These companies dominate their respective industries and are profiting from consistent investment in the lucrative artificial intelligence (AI) market.

While Microsoft is known for consistency, Nvidia and Amazon are expanding at a rate that could allow them to overtake the company. So, here are two growth stocks I predict will be worth more than Microsoft in five years.

1. Nvidia: A meteoric rise that is unlikely to slow any time soon

Nvidia’s business has delivered record growth since the start of 2023, with its stock up 779%. Its meteoric rise has seen it steadily climb through the ranks of the world’s most valuable companies, as seen in the chart below.

As of this writing, Nvidia’s market cap is above Microsoft’s. Their positions switched multiple times this month, suggesting could swap again by the time you read this. However, Nvidia is included in this list as I’d argue that it will have surpassed Microsoft for good and gained a solid lead within the next five years.

Nvidia massively outperformed Microsoft in 2024, with its stock up 159% compared to Microsoft’s 10% rise. Meanwhile, Nvidia’s quarterly revenue is up 18% year to date, with Microsoft’s up 4%. At this rate, Nvidia could even secure its spot ahead of Microsoft much sooner than five years.

Nvidia’s stellar gains are primarily thanks to its dominance in AI. The company is responsible for between 70% and 95% of all AI graphics processing units (GPUs), the chips necessary for training AI models. Competitors like Advanced Micro Devices and Intel are working to catch up, launching rival GPUs this year. However, Nvidia’s head start and $39 billion in free cash flow (compared to AMD’s $1 billion and Intel’s negative $13 billion) suggests it won’t have too much trouble maintaining its lead.

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In AI, Microsoft has a prominent role in cloud computing. However, fellow cloud giants Amazon and Alphabet are much closer competitors than Nvidia’s rivals in the GPU market.

Nvidia will report its second quarter of fiscal 2025 earnings on Aug. 28. After over a year of beating quarterly earnings, the company will likely continue recent trends and deliver another quarter of impressive growth. Its stock could soar, furthering its lead on Microsoft.

2. Amazon: Soaring earnings and the cash to surpass its rivals

Amazon and Microsoft are in steep competition in the cloud industry. As of Q2 2024, Amazon Web Services (AWS) cloud market share stood at 31%, while Microsoft Azure’s was at 25%. However, Amazon ramped up its cloud investment over the last year, which could allow it to hold onto its lead in the industry and eventually push its market cap above Microsoft’s.

Amazon consistently outperformed Microsoft over the last year. Solid growth in retail and AWS has seen Amazon’s profits soar, allowing it to sink billions into its AI efforts.

In March, Bloomberg reported that Amazon plans to spend nearly $150 billion on data centers over the next 15 years to expand AWS’ reach. The company anticipates an explosion of demand for AI applications and other digital services, requiring a more extensive cloud network. The news aligns with multiple reports in recent months that announced Amazon’s data center investment in U.S. locations including Ohio, Indiana, and Virginia, as well as international spots such as Singapore, Spain, Saudi Arabia, India, and Taiwan.

The expansion will increase Amazon’s cloud and AI capabilities. Meanwhile, a vast network will allow it to boost other areas of its business with the generative technology, such as e-commerce, grocery, digital advertising, and more.

Amazon’s market cap currently sits at $1.8 trillion. However, its earnings and stock are expanding at a rate that will likely see it overtake Microsoft in the coming years.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Prediction: 2 Growth Stocks That Will Be Worth More Than Microsoft in 5 Years was originally published by The Motley Fool

A big shake-up just hit Chipotle Mexican Grill (NYSE: CMG). Longtime chief executive officer (CEO) Brian Niccol just announced a surprising departure to Starbucks. Niccol has been instrumental in delivering a turnaround for Chipotle after its foodborne illness outbreaks, leading the stock to 800% returns since joining in 2018, making it one of the best-performing stocks in the world over that time.

Leaving a company — especially for a competitor — will always upset investors. It is no surprise, then, to see Chipotle stock falling on this news. In fact, the stock has taken a 25% dive since its recent stock split in June. This is not the worst drawdown ever for Chipotle, but one of the most significant in the last 10 years. Here’s my prediction for what comes next with the Brian Niccol era over.

A surprising CEO exit

On Aug. 13, Starbucks announced it had hired Brian Niccol away from Chipotle as its CEO, effective immediately. This was a shocker for two reasons. First, Starbucks had not previously told investors it was looking for a new CEO. Second, Chipotle’s valuation was similar to that of Starbucks at the time of the announcement, with a market cap range of $75 billion to $100 billion. It also has a clearer path to store expansion and has put up much better performance over the last few years compared to the coffee giant.

So why did Niccol leave for Starbucks? We may never know the real details, but it seems like Niccol may have thought Chipotle was in a great place and was now looking for his next big project. After Niccol arrived at Chipotle in 2018, he righted the ship after the terrible foodborne illness outbreaks at its restaurants.

The stock has returned over 800% for investors since he had taken over the reins, crushing Starbucks’ returns over that same time period. Niccol may see more ways to improve the Starbucks business and feels comfortable with the culture he has built. Or, it might just be the money.

Either way, this shouldn’t be taken as a knock on Chipotle’s business. In fact, it says the opposite. Chipotle’s business has thrived over the past few years, posting positive same-store sales growth every year since Niccol took over, even during the COVID-19 pandemic. This is why the stock trades at a price-to-earnings ratio (P/E) above 50. Investors are optimistic about the future for Chipotle.

The new CEO hire is a vital decision

The new CEO hire will be a big moment for Chipotle investors. Management changes always come with uncertainty, especially with delicate operations such as restaurants. The new leader won’t be in as difficult as a spot as Niccol in 2018, with Chipotle’s business firing on all cylinders at the moment while Niccol had to rebuild the brand after the food poisonings. In fact, the biggest risk is that the new CEO changes up Chipotle’s strategy and makes things worse. You might say it is impossible to mess up its burrito and Mexican bowl formula, but you’d be surprised how often management can impair a once-loved business.

We’ve seen it happen many times before. Starbucks has struggled multiple times in the past when longtime CEO Howard Schultz left the company. Even outside the restaurant industry, Disney has gone through bouts of inconsistent managers that have hampered operations. There’s no guarantee the new CEO will break Chipotle’s momentum. But there’s no guarantee they will succeed, either. There is uncertainty today as opposed to with Niccol, who investors had high certainty was a strong leader.

CMG Revenue (TTM) data by YCharts.

What comes next for the stock?

There are three possible outcomes for Chipotle and its new CEO. Either they improve, maintain, or impair Chipotle’s restaurant operations. Given that Brian Niccol might be the best leader in the entire restaurant industry, I have doubts a new CEO can meaningfully improve Chipotle’s business can from here. It can keep growing the number of restaurants in operation (3,530 at the end of last quarter) for a long while, but there is only so much you can do to optimize the restaurant business, especially if the company has exhausted its possibilities of opening new restaurants in prime locations. It is a simple model at the end of the day.

So, Chipotle will either maintain its stellar performance or get worse under the new CEO. However, even if Chipotle maintains its excellence, I think investors should be cautious about the stock. It trades at a P/E of 53, which is around double the S&P 500 index average.

Assuming sales and net profit grow by 100% over the next five years (the former grew at the same pace over the last five years), it’s hard to argue the stock is worth owning. Assuming consistent profit margins, that would only bring down Chipotle’s P/E to 26.5, which is not cheap on a five-year forward basis.

Add it altogether, and it looks like Chipotle stock is pricing in a ton of growth and high expectations for the next few years, no matter who the CEO would be. Despite its strong historical performance, this indicates investors should stay away from buying Chipotle stock. Keep this one on the watch list for now.

Should you invest $1,000 in Chipotle Mexican Grill right now?

Before you buy stock in Chipotle Mexican Grill, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chipotle Mexican Grill wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends the following options: short September 2024 $52 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

Most investors have probably heard of Bill Gates, best known as a billionaire philanthropist and co-founder of Microsoft (NASDAQ: MSFT).

After heading up the technology company he founded for more than 25 years, the former CEO stepped down to focus on his charity work. Gates is worth an estimated $132.6 billion (as of this writing), according to Forbes, making him the ninth richest person in the world. However, the fabled billionaire has pledged that “the vast majority of my wealth would go toward helping as many people as possible.”

The vehicle he uses to support that goal is the Bill & Melinda Gates Foundation Trust. “Our mission is to create a world where every person has the opportunity to live a healthy, productive life,” the Gates Foundation website declares. The foundation has made grant payments of $77.6 billion since its inception, “taking on the toughest, most important problems.” As a result, holdings of the Trust tend to vary from quarter to quarter.

While the Trust continues to own stakes in more than two dozen companies, 83% of its portfolio was comprised of just four stocks at the close of the second quarter.

1. Microsoft: 33%

Of all the holdings in the Gates Trust, Microsoft is by far the largest. This shouldn’t be a surprise, given that Gates set up the foundation with his own holdings. The Trust owns roughly 35 million shares of Microsoft stock valued at $14.7 billion.

Yet this isn’t the Microsoft of old. The company has expanded beyond its browser and operating system software, with Azure Cloud becoming the fastest-growing cloud infrastructure provider. It’s up 29% year over year in the most recent quarter, outpacing both Amazon Web Services (AWS) and Alphabet‘s Google Cloud.

However, it was Microsoft’s early move into generative AI that has investors most excited. Management noted that Azure’s cloud growth included “eight points from AI services,” helping illustrate the upside. The company’s AI-powered digital assistant — Copilot — and other AI tools could generate incremental revenue of $143 billion by 2027, according to analysts at Evercore ISI.

The Trust also benefits from Microsoft’s quarterly dividend, which the company has paid out consistently since 2004 and increased every year since 2011. The current yield of 0.7% might seem inconsequential, but that’s a function of the impressive stock price gains of more than 200% over the past five years. Furthermore, with a payout ratio of less than 25%, there are likely many more dividend increases on the horizon.

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2. Berkshire Hathaway: 21%

Fellow billionaire Warren Buffett, CEO of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), has similar plans to donate the bulk of his wealth to charity. He joined Gates in the “Giving Pledge” in 2006 and has since donated roughly $43 billion to the Trust, including a bequest of $4 billion in June. As a result, the Gates Foundation currently holds nearly 25 million Berkshire Hathaway Class B shares worth $11 billion.

Given Berkshire’s portfolio of profitable businesses and successful stock holdings, it isn’t surprising that the Trust continues to keep so much of the stock on hand. The portfolio provides built-in diversification and is expected to rake in billions in dividend income over the coming year. Furthermore, Berkshire just pared down its stock holdings and boosted its cash pile to a record high. It’s now holding roughly $277 billion in cash.

Given the company’s history of success and massive cash pile, it isn’t surprising that it’s still one of the Trust’s largest holdings.

3. Waste Management: 16%

Gates has a soft spot for boring companies with strong recurring revenue, which is the very definition of Waste Management (NYSE: WM). If you have any doubt, consider this: The Gates Trust has a stake of more than 35 million shares of Waste Management stock worth $7.3 billion.

Beyond just trash collection, Waste Management owns a number of reclamation stations that recover glass, paper, metal, and plastics and redirect them for recycling. The company also operates a number of landfills where it collects landfill gases to generate electricity and power vehicles.

In the second quarter, revenue grew 5.5% year over year, while its adjusted operating EBITDA increased 10%.

Let’s not forget the dividend. Waste Management has increased its payout for 15 consecutive years, with a current yield of 1.43%. And with a payout ratio of 46%, there’s plenty more where that came from.

4. Canadian National Railway: 13%

Another area where Gates and Buffett share common ground is enduring faith in railroads. Buffett was clear when he bought out Burlington Northern Santa Fe in 2009, saying that railroads transported goods “in a very cost-effective way… they do it in an extraordinarily environmentally friendly way… [releasing] far fewer pollutants into the atmosphere.” Gates clearly shares this mindset, as the Trust holds nearly 55 million shares of Canadian National Railway (NYSE: CNI) worth $6.2 billion.

What sets Canadian National apart is that it’s the only transcontinental railroad in North America, connecting the Atlantic coast, the Pacific coast, and the Gulf of Mexico. Regarding Buffett’s point, railroads reduce greenhouse gas emissions by 75%. This is primarily because they’re four times more efficient than long-haul trucks, making railroads a more cost-effective option. Add to that their high barriers to entry and significant economic moat, and it’s easy to understand the appeal.

Canadian National has a solid track record of dividend payments, with consecutive increases every year since it was initiated in 1996, and a current yield of 2.1%. The current payout ratio of 38% suggests there’s plenty of opportunity for future increases.

Should you invest $1,000 in Microsoft right now?

Before you buy stock in Microsoft, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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, Canadian National Railway, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Berkshire Hathaway, and Microsoft. The Motley Fool recommends Canadian National Railway and Waste Management and 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.

Billionaire Bill Gates Has 83% of His $48 Billion Portfolio in Just 4 Stocks was originally published by The Motley Fool

A version of this post was published on Tker.co. Subscribe here.

Liz Ann Sonders, chief investment strategist at Charles Schwab, compiled an outstanding list of quotes from history’s investing legends. (I recommend reading her post from start to finish.)

One quote that stuck out to me came from Edwin Lefevre, author of “Reminiscences of a Stock Operator”:

Some people try to make money trading the stock market over short-term periods. Some aim to build wealth by investing in the stock market over long, multi-year timeframes. Many do some combination of both.

All of these people seek out information and insights that might help them get an edge and improve their returns.

Unfortunately, trading tips and investment advice come with a lot of the same jargon that make it easy to confuse the two if you’re not paying careful attention.

When a markets expert starts talking, the first question you should ask is: “What is the timeframe?”

Is it one month? One year? Several years? One day?

Why? Because it’s possible that the same person who’ll tell you stocks will fall in the coming weeks will also tell you they expect prices to be higher in the coming years. In fact, I can almost guarantee you that the Wall Street strategists who expect the S&P 500 to fall this year will also tell you it’ll be much higher in three to five years.

All this relates to Step 4 of TKer’s “5-step guide to processing ambiguous news in the markets and the economy”: “Beware the motivations of those communicating the information.”

The hot shot hedge fund manager on financial TV may present a compelling, eye-catching case for why the stock market could tumble from here. However, reporters don’t always follow up and ask what to expect when you stretch the timeframe, which may be more relevant to long-term investors. This lack of temporal context is common in the news industry, which tends to focus on the recent past and the near future.

This doesn’t mean that investors should completely ignore what the pros are saying about what could happen in the coming weeks or months. While expectations for volatility in the near-term might not affect how you position your long-term investments, they can serve as valuable reminders to keep your “stock market seat belts” fastened.

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After all, the odds that stocks fall are relatively high when you look at short timeframes.

As my friend Joseph Fahmy says: “The majority of arguments on FinTwit have to do with timeframe. One person could be selling a stock because they think it will go down over the next 2 days and another could be buying because they think it will go up over the next 2 years. Don’t assume everyone trades like you.”

FinTwit, the community of people posting about finance on X, sees lots of heated bulls vs. bears debates about markets that come to no resolution. And it’s often the case that one side may be making the case for a short-term trade whereas the other side is making the case for a long-term investment — but the two sides aren’t aware of the disconnect. They’re not necessarily in disagreement; they’re just arguing about different things.

Zooming out 🔭

TKer Stock Market Truth No. 1 says: “The long game is undefeated.“ In other words, the stock market usually goes up over time.

Meanwhile, TKer Stock Market Truth No. 2 says: “You can get smoked in the short-term.” That is to say long-term investors should be prepared to experience a lot of sell-offs on the way up.

When I compiled this list of truths, I deliberately put these two next to each other because I wanted to make clear that bearish market developments can occur within a bullish long-term framework.

All of this is to say that it’s possible to be bullish and bearish simultaneously. The nuance is in the timeframe.

Related from TKer:

Reviewing the macro crosscurrents 🔀

There were a few notable data points and macroeconomic developments from last week to consider:

🏛️ “The time has come”: “The upside risks to inflation have diminished,” Fed Chair Jerome Powell said on Friday. “And the downside risks to employment have increased.”

Speaking at the Kansas City Fed’s economic symposium in Jackson Hole, Powell acknowledged how the unemployment rate had risen to 4.3% in July, saying: “We do not seek or welcome further cooling in labor market conditions.“

“The time has come for policy to adjust,” he added. “The direction of travel is clear.“

Fed watchers see this language as a signal that the central bank’s first rate cut could come as soon as its September 17-18 Federal Open Market Committee meeting.

For more on what this means and how we got here, read: Fed Chair Powell: ‘The time has come’ ⏰

🏚 Home sales rose. Sales of previously owned homes increased by 1.3% in July to an annualized rate of 3.95 million units. From NAR chief economist Lawrence Yun: “Despite the modest gain, home sales are still sluggish. But consumers are definitely seeing more choices, and affordability is improving due to lower interest rates.”

For more on housing, read: The U.S. housing market has gone cold 🥶

💸 Home prices cooled. Prices for previously owned homes declined from last month’s record levels, but they remain elevated. From the NAR: “The median existing-home price for all housing types in July was $422,600, up 4.2% from one year ago ($405,600). All four U.S. regions posted price increases.”

🏘️ New home sales rise. Sales of newly built homes jumped 10.6% in July to an annualized rate of 739,000 units.

🏠 Mortgage rates tick lower. According to Freddie Mac, the average 30-year fixed-rate mortgage declined to 6.46%, down from 6.49% last week. From Freddie Mac: “Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year. Earlier this month, rates plunged and are now lingering just under 6.5%, which has not been enough to motivate potential homebuyers. Rates likely will need to decline another percentage point to generate buyer demand.”

There are 146 million housing units in the U.S., of which 86 million are owner-occupied and 39% of which are mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to movements in home prices or mortgage rates.

For more on mortgages and home prices, read: Why home prices and rents are creating all sorts of confusion about inflation 😖

⛽️ Gas prices fall. From AAA: “Reaching a price point last seen on March 6, the national average for a gallon of gas fell six cents to $3.38 since last week. According to new data from the Energy Information Administration (EIA), gas demand crept higher last week from 9.04 million b/d to 9.19. Meanwhile, total domestic gasoline stocks fell from 222.2 to 220.6 million barrels, but gasoline production increased, averaging 9.8 million daily. Mild gasoline demand, steady supply, and low oil costs may cause pump prices to slide further.”

For more on energy prices, read: Higher oil prices meant something different in the past 🛢️

🛍️ Spending behavior is normalizing. From Apollo’s Torsten Slok: “During the pandemic, households increased spending on goods because they were shopping online, and services spending was lowered because they couldn’t go to restaurants and travel. The chart below shows that consumers have significantly increased spending on services over the past two years, and the current share at 68% is now close to pre-pandemic levels. The bottom line is that we are getting to the end of the catch-up effect for companies in the consumer services industry.“

💼 Unemployment claims ticked higher. Initial claims for unemployment benefits rose to 232,000 during the week ending August 17, up from 228,000 the week prior. While this metric continues to be at levels historically associated with economic growth, recent prints have been trending higher.

For more on the labor market, read: The labor market is cooling 💼

💵 People want more money to change jobs. From the New York Fed’s July SCE Labor Market Survey: “The average reservation wage—the lowest wage respondents would be willing to accept for a new job—increased to $81,147 from $78,645 in July 2023, though it is down slightly from a series high of $81,822 in March 2024.“

For more on why wages matter right now, read: Revisiting the key chart to watch amid the Fed’s war on inflation 📈

🌎 Immigration has helped boost growth. From Barclays: “Almost half a million people immigrated into the US in December, a record that was just the latest in a series of elevated inflows stretching back to spring 2022. While the surge has caused a public backlash and prompted political measures to curtail it, immigration has helped boost economic growth. It has helped relieve post-pandemic labor shortages and has been one of the factors behind the strength of the US economy. … Immigrants likely contributed nearly a third of economic growth. We estimate that new immigrants accounted for three quarters of the increase in private payroll employment over the past year. Their contribution of additional hours worked to output growth more than offset a drag from US-born workers.“

🐢 Survey signals growth, but cooling growth. From S&P Global’s August Flash U.S. PMI: “The solid growth picture in August points to robust GDP growth in excess of 2% annualized in the third quarter, which should help allay near-term recession fears. Similarly, the fall in selling price inflation to a level close to the pre-pandemic average signals a ‘normalization’ of inflation and adds to the case for lower interest rates.”

Keep in mind that during times of perceived stress, soft data tends to be more exaggerated than actual hard data.

For more on this, read: What businesses do > what businesses say 🙊

🇺🇸 Most U.S. states are still growing. From the Philly Fed’s July State Coincident Indexes report: “Over the past three months, the indexes increased in 36 states, decreased in 13 states, and remained stable in one, for a three-month diffusion index of 46. Additionally, in the past month, the indexes increased in 26 states, decreased in 17 states, and remained stable in seven, for a one-month diffusion index of 18.”

For more on economic growth, read: Economic growth: Slowdown, recession, or something else? 🇺🇸

Putting it all together 🤔

We continue to get evidence that we are experiencing a bullish “Goldilocks” soft landing scenario where inflation cools to manageable levels without the economy having to sink into recession.

This comes as the Federal Reserve continues to employ very tight monetary policy in its ongoing effort to get inflation under control. Though, with inflation rates having come down significantly from their 2022 highs, the Fed has taken a less hawkish tone in recent months, even signaling that rate cuts could come later this year.

It would take a number of rate cuts before we’d characterize monetary policy as being loose, which means we should be prepared for relatively tight financial conditions (e.g., higher interest rates, tighter lending standards, and lower stock valuations) to linger. All this means monetary policy will be relatively unfriendly to markets for the time being, and the risk the economy slips into a recession will be relatively elevated.

At the same time, we also know that stocks are discounting mechanisms — meaning that prices will have bottomed before the Fed signals a major dovish turn in monetary policy.

Also, it’s important to remember that while recession risks may be elevated, consumers are coming from a very strong financial position. Unemployed people are getting jobs, and those with jobs are getting raises.

Similarly, business finances are healthy as many corporations locked in low interest rates on their debt in recent years. Even as the threat of higher debt servicing costs looms, elevated profit margins give corporations room to absorb higher costs.

At this point, any downturn is unlikely to turn into economic calamity given that the financial health of consumers and businesses remains very strong.

And as always, long-term investors should remember that recessions and bear markets are just part of the deal when you enter the stock market with the aim of generating long-term returns. While markets have recently had some bumpy years, the long-run outlook for stocks remains positive.

For more on how the macro story is evolving, check out the the previous TKer macro crosscurrents »

A version of this post was published on Tker.co. Subscribe here.

Artificial intelligence (AI) is poised to be one of the biggest disruptive secular growth trends of all time. Most sources project the global AI market to have a compound annual growth rate (CAGR) in the 30% to 40% range through 2030, with 2030 market sizes ranging from over $800 billion to more than $1 trillion.

The AI revolution had been underway in recent years but just kicked into high gear in early 2023. This occurred following the advent of generative AI, which greatly expanded the potential use cases for AI. Generative AI wowed the tech world when OpenAI released its ChatGPT chatbot in late 2022.

There are several main ways to invest in AI. This article focuses on companies that are largely developing and supplying semiconductors, or “chips,” and other technology to enable AI capabilities.

Best AI chip/technology stocks

Data sources: Yahoo! Finance and YCharts. Data to Aug. 23, 2024. P/E = price-to-earnings. EPS = earnings per share. *Arm held its initial public offering (IPO) in September 2023.

Let’s put the 10-year percentage gains in monetary terms. Here’s how much $1,000 invested a decade ago in each of the following would be worth now:

• Broader market (S&P 500): $3,410

• Nvidia: $283,200 (yep, more than a quarter of a million dollars)

1. Nvidia

To call Nvidia “dominant” in the AI chip space is an understatement. The company’s graphics processing units (GPUs) are the gold standard for accelerating the processing of AI workloads in data centers.

By all accounts, Nvidia has well over a 90% share of the market for AI GPU chips for data centers and over 80% share of the overall data center AI chip market. Advanced Micro Devices CEO Lisa Su projects the fast-growing data center AI chip market will reach $400 billion in revenue by 2027, which equates to an average annual growth rate of about 73%.

Nvidia isn’t a pure play on AI, but it’s as close as you can get in the semiconductor space. Its data center market platform accounted for 87% of its revenue in its quarter ended in late April, and this business largely supplies chips and related technology (including networking tech and software) for enabling AI and high-performance computing.

AI is also enhancing Nvidia’s offerings in its other platforms, which include computer gaming (10% of last quarter’s revenue), professional visualization (1.9%), and auto and robotics (1.5%).

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Nvidia is scheduled to report its results for the second quarter of fiscal 2025 (ended late July) on Wednesday, Aug. 28, after the market close. Management guided for revenue to grow 107% year over year to $28 billion. It also guided (indirectly by providing a bunch of inputs) for adjusted earnings per share (EPS) of $6.22, or 130% growth.

2. Arm Holdings

Arm, based in the U.K., designs architectures for central processing units (CPUs) and licenses those designs and related intellectual property (IP) to customers. Its customers include many of the biggest names in consumer technology and semiconductors, including Apple, Nvidia, and Qualcomm.

Arm, founded in 1990, was critical in enabling the smartphone revolution. Its chip architecture is very energy-efficient, allowing smartphones to have good battery performance, which led to their fast adoption. Arm-based chips are found in about 99% of smartphones, as well as in countless other small form-factor products.

In recent years, the company has expanded into higher-value markets, such as data center servers, AI accelerators, and smartphone applications (apps) processors. AI is driving growth in all these markets. The company said in its most recent earnings report that “AI’s substantial energy requirements are driving growth in Arm’s compute platform, which is the most power-efficient solution available.”

In late July, Arm reported its results for its first quarter of fiscal 2025, which ended in late June 2024. Revenue surged 39% year over year to $939 million, sprinting by the $908 million Wall Street consensus estimate. License revenue rocketed 72% to $472 million, and royalty revenue jumped 17% to $467 million.

The even better news for investors is that Arm’s profit grew even more than its revenue, which means its profit margin continued to expand. Adjusted for one-time items, its net income was $419 million, or $0.40 per share, up a whopping 67% year over year. That result easily beat the $0.34 analysts had expected.

I included the adjusted net income figure to highlight how extremely profitable Arm is. Its adjusted profit margin in the quarter was 44.6% ($419 million divided by $939 million).

What about valuations for Nvidia and Arm stocks?

Nvidia stock is trading at 47 times its projected earnings for the current fiscal year. That’s high in a vacuum — but reasonable for a company that Wall Street expects to grow earnings at an average annual rate of 46.4% over the next five years. Moreover, Nvidia regularly exceeds earnings estimates easily, so 46.4% is likely to prove too low.

Arm’s stock is incredibly pricey. It’s trading at 86 times its projected earnings for the current fiscal year. This is very high not only in a vacuum but also for a company that Wall Street projects will grow earnings at an average annual pace of 31.2% over the next five years.

So, why do I consider Arm stock the second-best (behind Nvidia) AI tech stock to buy now? I’m working on a full article on why it’s worth paying up for Arm stock, so suffice it to say that there are good reasons to believe that Wall Street is significantly underestimating Arm’s earnings growth potential. In each of the company’s four quarters as a public company, it has cruised by the analyst consensus earnings estimate.

That said, before making an investment decision, some investors might want to watch Arm for another couple of quarters to see whether it keeps churning out robust top- and bottom-line growth and sailing by Wall Street’s estimates.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Nvidia, and Qualcomm. The Motley Fool has a disclosure policy.

2 Best Artificial Intelligence (AI) Stocks to Buy Now: AI Chip Edition was originally published by The Motley Fool

Investing in dividend stocks can be a fantastic way to generate passive income. Many high-quality companies offer higher-yielding payouts. Furthermore, several of these top-notch income producers steadily increase their payouts yearly, making them better than the fixed income you could earn from a bond.

Brookfield Renewable (NYSE: BEPC)(NYSE: BEP), Kinder Morgan (NYSE: KMI), and Vici Properties (NYSE: VICI) stand out as great income stocks to buy right now. They all offer dividend yields of at least 5%, putting them several times higher than the S&P 500’s sub-1.5% dividend yield. Meanwhile, they have solid records of increasing their payouts each year, which seems very likely to continue.

A high-powered income stream

Brookfield Renewable is one of the world’s leading renewable power producers. It has a globally diversified portfolio of hydro, wind, and solar energy assets that generate clean electricity. It sells that power to utilities and large corporate buyers under long-term power purchase agreements. Those contracts supply the company with stable and growing income (70% link power rates to inflation).

The company pays out a reasonable amount of its stable cash flow to support its high-yielding dividend (less than 75% of its funds from operations (FFO) in the first half of this year). That gives it a nice cushion while enabling it to retain cash to help fund new investments. Brookfield Renewable also has a strong investment-grade balance sheet.

The leading renewable energy company expects to grow its FFO per share by more than 10% annually through at least 2028. Powering that forecast is a combination of inflation-linked rate increases, margin enhancement activities, development projects, and acquisitions. Those catalysts should give it ample power to achieve its plan of increasing its dividend by 5% to 9% each year. Brookfield has raised its payout by at least 5% for 13 straight years.

Lots of fuel to grow this high-yielding dividend

Kinder Morgan operates North America’s largest gas pipeline network and other energy infrastructure assets. These businesses generate very stable cash flow. Roughly 68% comes from take-or-pay and hedging contracts, meaning it gets paid a set amount regardless of volumes and market pricing. Fee-based agreements (fixed-price contracts with variable volumes) comprise another 27% of its earnings mix, leaving only 5% of its earnings exposed to commodity prices.

The pipeline giant pays out a little more than half of its stable cash flow in dividends, retaining the rest to fund expansion projects, repurchase shares, and maintain a strong balance sheet. The company currently has $5.2 billion of expansion projects under construction, with half expected to enter service by the end of next year and supply near-term income growth. Kinder Morgan can supplement its solid organic growth rate with accretive acquisitions.

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The company’s growing cash flows should give it the fuel to continue increasing its dividend. It delivered its seventh consecutive annual dividend increase earlier this year.

A low-risk wager on a growing income stream

Vici Properties is a real estate investment trust (REIT) focused on owning experiential properties like gaming, hospitality, and entertainment destinations. It leases these properties back to the operators under long-term net leases. Those leases supply it with predictable cash flow that rises over time due to contractual rental escalation clauses.

The REIT pays out about 75% of its stable rental income in dividends. It retains the rest to help fund new income-generating real estate investments. It also has a strong balance sheet, giving it additional flexibility to make new investments.

Vici Properties has multiple growth drivers in addition to rent growth. It will acquire experiential properties in sale-leaseback transactions with the operators, buy properties from other investors, and even acquire rival REITs. In addition, it provides partners with funding for development and expansion projects, which can open the door to future property acquisitions.

The company’s growing cash flow helps support a steadily rising dividend. Vici Properties has increased its payout in all six years since it came public, growing the dividend at a peer-leading 7.9% compound annual pace.

Top-notch income stocks

Brookfield Renewable, Kinder Morgan, and Vici Properties offer high-yielding dividends that have steadily grown over the years. With strong financial profiles and solid growth prospects, those upward trends should continue. That makes them great stocks to buy right now for passive income.

Should you invest $1,000 in Kinder Morgan right now?

Before you buy stock in Kinder Morgan, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kinder Morgan wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

Matt DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, Kinder Morgan, and Vici Properties. The Motley Fool has positions in and recommends Brookfield Renewable, Kinder Morgan, and Vici Properties. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

3 Dividend Stocks Yielding 5% to Buy Right Now for Passive Income was originally published by The Motley Fool

Realty Income (NYSE: O) has been a money-making investment over the years. The real estate investment trust (REIT) has paid dividends like clockwork. It recently paid its 650th consecutive monthly dividend.

The REIT routinely raises its dividend payment. It most recently delivered its 126th dividend increase since coming public in 1994, pushing its dividend yield further above 5%. That was its fourth dividend increase already this year. It has now given investors a raise in 107 straight quarters and 30 consecutive years, growing its payout at a 4.3% annual rate during that timeframe, including by more than 3% over the past year.

Here’s how it’s able to continue paying its investors even more money.

Built to produce stable income

Realty Income focuses on owning a portfolio of income-generating commercial real estate. The company owns a diversified portfolio of 15,450 retail, industrial, gaming, and other properties across the U.S. and Europe. It primarily owns properties leased to tenants in industries resilient to economic downturns and isolated to the pressures of e-commerce, such as grocery, convenience, dollar, and drug stores.

The REIT signs long-term net leases for these properties with high-quality tenants. That lease structure requires tenants to cover building insurance, real estate taxes, and routine maintenance expenses. Its leases also typically feature some form of annual rental rate escalation clause. They provide the REIT with very stable income that tends to rise by about 1% annually when factoring in bad debt expenses.

Realty Income typically pays out a conservative percentage of its income in dividends, less than 75% of its adjusted funds from operations (FFO). That gives it a nice cushion while enabling it to retain a meaningful percentage of its cash flow to fund new investments.

It also has an elite balance sheet. It’s one of only eight REITs in the S&P 500 with two A3/A- credit ratings or better. Realty Income also has very low leverage ratios, giving it even more financial flexibility.

Multiple growth drivers

Realty Income’s strong financial profile enables it to steadily expand its portfolio. The company’s retained cash flow after paying dividends alone can help fund enough new investments to grow its adjusted FFO by around another 1% per year after factoring in the impact of refinancing maturing debt in today’s higher-interest-rate environment. Add in rent growth, and the REIT can internally deliver around 2% annual growth.

Meanwhile, Realty Income’s elite balance sheet gives it plenty of financial flexibility to externally fund accretive acquisitions. The REIT estimates that for every $1 billion of additional real estate investments it makes, it can add 0.5% to its annual adjusted FFO. It conservatively expects externally funded acquisitions will add another 2% to 3% to its adjusted FFO each year. Add in its internal growth drivers, and Realty Income should grow its adjusted FFO per share by 4% to 5% per year. Factor in its high-yielding dividend, and its total return should be around 10% annually.

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The REIT should have no shortage of investment opportunities. It estimates that the total addressable global net lease real estate market is $14 trillion. That gives it a long growth runway. Meanwhile, it has steadily expanded its opportunity set by adding new property verticals. In recent years, it has added data centers, gaming properties, and new European markets to its portfolio. It has also launched a credit investment platform. These new platforms have opened the doors to additional growth opportunities.

Realty Income should continue making investors more money

Realty Income built a money-making real estate empire. The company’s durable and growing portfolio prints cash, which it distributes to investors via a steadily rising dividend. With a sound financial profile and a long growth runway ahead, this REIT should continue making money for its investors in the coming years.

Should you invest $1,000 in Realty Income right now?

Before you buy stock in Realty Income, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

Matt DiLallo has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

This 5%-Yielding Dividend Stock Just Made Investors Even More Money. Here’s How. was originally published by The Motley Fool

Bill Ackman of Pershing Square Holdings and Andreas Halvorsen of Viking Global Investors are two highly regarded billionaire-level investment managers. In the second quarter, their companies added new positions in two stocks that just happen to be members of the prestigious Dow Jones Industrial Average, an index that tracks 30 blue chip stocks.

Ackman’s firm reported a position worth $229 million in Nike (NYSE: NKE), while Viking Global disclosed a $478 million investment in McDonald’s (NYSE: MCD). Let’s explore why these billionaires like these stocks even as both are navigating headwinds in the apparel and restaurant industries right now.

1. Nike

Ackman has a knack for spotting value where others don’t. Over the last 20 years, Pershing Square delivered annualized returns of 16%, and his net worth has grown to $9 billion in recent years, according to Forbes.

Share prices of Nike are down 53% from highs set in 2021, which led Ackman’s Pershing Square to start a new position in Q2. The top athletic apparel brand was hit by weak consumer spending trends that challenged several retailers over the past couple of years.

Nike is a large company that generates $51 billion in annual revenue, two-thirds of which is from footwear. Fiscal 2024 (which ended in May) revenue was flat year over year. However, most of the weak sales trends are associated with Nike’s lifestyle products. Its performance products for several sports its services are still posting a double-digit sales increase last quarter.

This suggests Nike has a clear path to improvement if it shifts more of its sales mix to performance products, like running and basketball shoes, which have been the heart of the brand for 50 years.

Meanwhile, Nike is keeping profits up to fuel dividend payments to shareholders. Its net income grew 12% in fiscal 2024, and it paid out 38% of its earnings in dividends. At its current quarterly payout of $0.37 per share, Nike’s forward dividend yield is 1.76% — its highest yield in a decade.

The stock still trades at a fair valuation, but its forward price-to-earnings (P/E) ratio is at 26, which isn’t cheap. Still, it’s a reasonable price for a top brand that can still grow its earnings at double-digit rates over the long term.

The recent investment suggests Ackman believes Nike’s brand is undervalued by investors right now. Nike has a clear solution to return to growth by doubling down on innovation within its sports categories, and good execution against this strategy could send the stock back toward its previous highs within the next two years.

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2. McDonald’s

Viking Global Investors founding partner and CEO Andreas Halvorsen has a net worth of $7.2 billion, according to Forbes. The company manages a large U.S. equity portfolio, worth $26 billion at the end of Q2. One of its new positions is a $480 million stake in McDonald’s.

Like Nike, McDonald’s reported weak sales under macroeconomic headwinds this year. Because this weakness is spreading across multiple industries, it doesn’t reflect anything negative about McDonald’s competitive position. This environment plays to McDonald’s strength as a value-based brand.

The Golden Arches reported a 1% year-over-year decrease in global comparable sales in Q2. Despite this soft performance, the stock held up well this year and is close to hitting new highs. The reason for the stock’s performance in light of weak sales might explain why Viking Global likes it.

McDonald’s is more than just fast food. It’s also a real estate company. It has a long history of owning the land its franchised restaurants sit on, which provides lucrative opportunities in leveraging these property values to ultimately deliver profitable growth for shareholders.

As of Dec. 31, 2023, the company held $20 billion of buildings and improvements on owned land on its balance sheet. It owned approximately 57% of the land and approximately 80% of the buildings used by its restaurants.

McDonald’s plans to increase its global restaurant base to 50,000 by 2027, which obviously will take advantage of its real estate expertise.

The combination of its franchise model, where 95% of its global restaurants are run by local owners, and its real estate strategy is why McDonald’s generated a high margin of $8 billion in net profit on $25 billion of revenue over the last year.

While McDonald’s posted an 11% year-over-year decline in earnings last quarter, it pays out around half of its earnings in dividends. It currently pays a quarterly dividend of $1.67, bringing its forward yield to 2.3%. That dividend appears very safe, given the manageable payout relative to earnings and McDonald’s profitable franchise business strategy.

The stock’s above-average dividend yield and attractive forward P/E of 24 make it a solid buy for the long term.

Should you invest $1,000 in Nike right now?

Before you buy stock in Nike, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nike wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.

These Prominent Billionaires Just Invested $700 Million in 2 Dow Jones Dividend Stocks was originally published by The Motley Fool

The stock of hydrogen fuel developer Plug Power (NASDAQ: PLUG) has been a bumpy ride. But since the start of 2021, that ride has been consistently lower. Back then, the stock was valued as high as $70 per share. Today, the share price is below $3.

Wall Street has been consistently wrong about where the stock price is headed next. In 2021, right before shares collapsed, nearly a dozen firms had a buy rating on the stock.

Wall Street expectations have come down sharply since those highs, but the average price target remains at nearly $5 per share — more than double the current share price. Could analysts finally be right? Is now the time to bet big on Plug Power? The answer might surprise you. (NYSE: GS)

This is why Wall Street can’t predict Plug

One of the biggest reasons why Wall Street has struggled to accurately predict the direction of Plug Power stock is that its cash flow inflection point could be years, if not decades, into the future. Goldman Sachs analysts have specifically called the company out for its distant cash flow projections. According to those analysts, Plug Power has an equity duration of 25.8 years. That means that the weighted average of the company’s expected cash flows is around 26 years. Take note that a bond of similar duration would be considered very long-term.

Because Wall Street often uses a discounted cash flow model to value a company, they must estimate and then discount projected cash flows back to the present. The more distant a cash flow is, the more sensitive it is to changes in assumptions.

Barring a sudden change in regulatory policy, it’s likely that hydrogen fuel cell demand won’t reach its biggest inflection point until 2030 at the earliest. As global consultancy McKinsey recently concluded, “Global clean hydrogen demand is projected to grow significantly to 2050, but infrastructure scale-up and technology advancements are needed to meet projected demand.” These infrastructure gaps will take many years to resolve. Until then, Plug Power will likely be spending billions in capital expenditures despite operating a money-losing business. Over the last year, for example, the company has spent between $100 million and $200 million per quarter building new plants and other infrastructure required for growth. Yet over that time period, net losses totaled well over $1 billion — more than half of the company’s entire market cap today.

This all adds up to why Wall Street has been so wrong about Plug Power over the years. Analysts were required to project cash flows that were far into the future. With mounting losses, increased competition, and higher interest rates, these projected cash flows have been pushed out even further into the future, having an outsized negative effect on the share price.

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Can Plug Power stock really rise by 130%?

There’s one important question to ask right now: Is this time different? The average one-year price target for Plug Power stock right now is $4.91. That’s around 130% higher than the current stock price. But it’s important to know that there’s a huge variance between predictions. One price target, for instance, is nearly $19 per share, while others are as low as $1.52 per share.

Can Plug Power stock actually rise by 130%? It’s doubtful. All of the pressures that led to the company’s share price collapse in recent years persist to this day. In fact, they may be stronger than ever before. While new regulations and incentives are growing more accommodating for hydrogen demand growth, it’s clear that a potential transition would still take decades. The economics and infrastructure to scale clear hydrogen fuel simply aren’t in place yet. Meanwhile, Plug Power’s financial resources continue to dwindle. Last year, the company’s auditors issued a going concern notice, indicating that insolvency was imminent if drastic measures weren’t taken. Plug Power addressed those concerns by massively diluting shareholders, something it continued to do in recent quarters.

Plug Power is simply between a rock and a hard place right now. Its persistent losses force it to continually tap the debt and equity markets. Yet positive cash flows remain many years away. This limits its ability to invest in new innovation, allowing competitors to develop newer, cheaper, more efficient solutions. Wise investors should stick to the sidelines for now.

Should you invest $1,000 in Plug Power right now?

Before you buy stock in Plug Power, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Plug Power wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool has a disclosure policy.

Wall Street Got It Wrong About Plug Power. Here’s Why. was originally published by The Motley Fool

ZURICH (Reuters) – Debt levels in the United States and Europe are a risk for international financial stability and for Switzerland, Swiss Finance Minister Karin Keller-Sutter said in a newspaper interview published on Saturday.

In an interview with Swiss daily Blick, Keller-Sutter extolled Switzerland’s “disciplined” finances, which she said had enabled the country to deal with the economic challenges posed by the COVID-19 pandemic and Russia’s invasion of Ukraine.

By contrast, other countries are “so indebted they’re hardly able to act any more”, she said, giving France as an example.

“Or take a look at America. That’s a time bomb. The mini-crash on the stock markets at the start of August was a warning shot,” the minister was quoted as saying.

“It was an expression of investors’ fear of a recession. Debt levels in the U.S. and Europe are a risk to international financial stability and a risk for Switzerland,” she added.

Keller-Sutter also discussed a government proposal to make Swiss bank UBS hold more capital in the wake of its acquisition of former rival Credit Suisse following its collapse last year.

She defended the additional capital requirements as necessary to protect Switzerland from another banking meltdown.

UBS CEO Sergio Ermotti has criticised the proposal, and she was asked whether she was in touch with him about it, saying:

“No, I haven’t been in contact with him any more. This is now a normal political process.”

The paper also asked what she thought about speculation that UBS could shift its headquarters abroad if it felt conditions in Switzerland were no longer right for it.

“The Federal Council (cabinet) believes it’s good for the economy to have a large Swiss bank. But the bank must decide for itself how it wants to position itself.”

UBS has said repeatedly it is committed to Switzerland.

(Reporting by Oliver Hirt; Writing by Dave Graham; Editing by Helen Popper)