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The “Magnificent Seven” are some of the most elite growth stocks around. Amazon was the worst performer of the group over the last five years, but it still delivered a market-beating 111% return. The best performer was Nvidia, which returned 2,830%.

However, after an incredible run in recent years, Wall Street has muted return expectations over the next year or so, which may reflect higher valuations for the group. The Magnificent Seven stock with the best near-term upside, according to analysts, is Google parent Alphabet, with 22% upside based on the average price target.

Investors looking for stocks with higher return potential should start their search in the small-cap arena. These are companies with market caps (share price times total shares outstanding) of less than $2 billion, and some are operating in exciting fields like voice recognition technology and electric aircraft that could experience strong growth in the coming years.

Here are two small-cap stocks with upside between 44% and 196%, based on the average Wall Street price target.

SoundHound AI (NASDAQ: SOUN) is a leader in artificial intelligence (AI)-powered voice technology that is seeing wide adoption with major brands in the restaurant and automotive industries. The company is posting impressive revenue growth that could send the stock higher next year. The average Wall Street price target is $7.79, according to YCharts, or about 44% above the current share price of $5.39.

SoundHound AI is a very small business, reporting just $13 million in revenue last quarter, but it’s growing like there’s no tomorrow. Revenue has consistently clocked in at more than 50% year over year recently. It could grow at high double-digit rates for several years as management pegs the addressable market for voice AI at more than $140 billion.

Some automotive brands recently upgraded to SoundHound Chat AI, which has accelerated customer engagement with SoundHound’s products. The annual rate of queries with its voice AI platform reached 5 billion in Q2, up 90% year over year. The company has more than 15 years of data accumulation that has improved the accuracy of SoundHound’s technology in understanding natural human speech, which gives SoundHound an advantage over competitors.

Stellantis, which owns several major car brands, including Jeep and Dodge, is using SoundHound Chat AI in its vehicles. SoundHound is also starting to see traction in other markets, including point-of-sale restaurant systems from Block‘s Square and Toast, in addition to millions of smart devices and TVs.

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The artificial intelligence (AI) revolution is creating an unprecedented surge in energy demand. The International Energy Agency projects that data centers may account for up to one-third of the anticipated increase in U.S. electricity demand from 2024 through 2026.

Major tech companies are making bold moves into nuclear power to meet their growing energy needs. Microsoft (NASDAQ: MSFT) recently signed a 20-year deal with Constellation Energy (NASDAQ: CEG) to power its data centers, while Amazon has strategically positioned a $650 million data center near Pennsylvania’s Susquehanna nuclear plant. Alphabet, the parent company of Google, has joined this nuclear renaissance by investing in advanced nuclear technologies, including fusion power.

These strategic investments signal that nuclear power has become the preferred solution for tech giants’ massive energy requirements. Armed with this background, let’s explore three nuclear power stocks that could fuel the AI revolution.

Oklo (NYSE: OKLO), backed by OpenAI CEO Sam Altman, has emerged as a front-runner in the next generation of nuclear technology. The company’s stock has delivered a remarkable 113% return year to date since its public debut last May, significantly outperforming the benchmark S&P 500.

The company specializes in developing advanced small modular reactors (SMRs), which promise enhanced safety features and operational flexibility in a compact design. Oklo’s innovative Aurora powerhouses are scheduled to begin operations in 2027, positioning the company to meet the surging demand for reliable clean energy from tech companies expanding their AI operations.

Early investors have shown strong confidence in Oklo’s potential, despite meaningful revenue being several years away. As with most pre-revenue nuclear technology companies, though, investors should expect significant price swings along the path to commercialization.

As mentioned, Constellation Energy recently secured a groundbreaking 20-year agreement with Microsoft to restart a reactor at Three Mile Island. This landmark deal signals growing confidence in nuclear power’s role in the AI revolution.

The market has responded enthusiastically to Constellation’s strategic moves in the nuclear space, driving its shares up more than 126% this year, vastly outperforming the S&P 500. The company’s position as the largest nuclear operator in the U.S. gives it a significant advantage in partnering with tech giants seeking stable, carbon-free power.

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A Wall Street analyst on Friday downgraded Apple (AAPL) stock to the equivalent of a sell rating ahead of the company’s September-quarter earnings report.

KeyBanc Capital Markets analyst Brandon Nispel lowered his rating on Apple stock to underweight from sector weight and set a price target of 200.

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On the stock market today, Apple stock rose 0.4% to close at 231.41.

Nispel cited his firm’s recent consumer survey and lower-than-expected upgrade rates for the iPhone 16 for his downgrade.

“We think the data suggests a slow upgrade path,” Nispel said in a client note.

Quarterly reports from U.S. carriers AT&T (T), T-Mobile US (TMUS) and Verizon Communications (VZ) showed slowing iPhone upgrade rates, he said.

“We continue to believe upgrade rates will be down mid-single digits in Q4 and low single digits in first-half 2025,” he said.

Also, consensus estimates for 2025 growth at Apple are “unrealistic,” Nispel said.

Apple Stock Down Before Fiscal Q4 Report

“Consensus expects Apple ’25 revenue growth to accelerate higher and to grow across all product categories and geographies,” he said. “As we look at historical data, these appear to be aggressive assumptions: Apple has grown all product categories at the same time just one out of the past 10 years (’21), and two times out of the past 20 years (’11 and ’21).”

Nispel also doesn’t see Apple Intelligence, the company’s take on artificial intelligence, accelerating sales. Apple plans to roll out the first batch of Apple Intelligence features next week in a software update for iPhone 15 and 16 handsets.

Meanwhile, Apple will report its September-quarter results late Thursday. Analysts expect Apple to earn $1.60 a share, up 10% year over year, on sales of $94.4 billion, up 5%, in its fiscal fourth quarter. The report will include the first 10 days or so of sales of Apple’s iPhone 16 smartphones, Apple Watch Series 10 smartwatches and AirPods 4 wireless earbuds.

Apple stock fell earlier this week after TF International Securities analyst Ming-Chi Kuo said Apple cut its iPhone 16 orders by about 10 million units for the fourth quarter and first half of 2025.

Other Analysts Maintain Buy Ratings

Other analysts on Friday also chimed in on Apple’s prospects.

TD Cowen analyst Krish Sankar reiterated his buy rating on Apple stock with a price target of 250.

In a client note, Sankar said he expects Apple to match estimates for the September quarter and guide “in line to below consensus” for the December quarter.

BofA Securities analyst Wamsi Mohan kept his buy rating on Apple stock with a price target of 256.

Mohan predicted Apple will report a “small beat” for the September quarter and give “better-than-expected” guidance for the current quarter.

“We expect iPhone demand will pick up post initial release of Apple Intelligence in late October,” he said in a report.

Apple stock is on the IBD Tech Leaders list.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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Nvidia (NASDAQ: NVDA) was the best-performing stock in the entire S&P 500 (SNPINDEX: ^GSPC) in 2023, ending the year with a 239% gain. It’s up a further 181% so far in 2024, but that isn’t enough to lead the index — first place is currently held by Vistra Corp.

However, a 181% gain is enough to place Nvidia ahead of every other company worth $1 trillion or more.

Nvidia’s incredible run of performance comes on the back of surging demand for its graphics processing units (GPUs) for data centers, which are the go-to choice among developers of artificial intelligence (AI) models.

The company is about to start shipping its next generation of AI GPUs based on its latest Blackwell architecture, which will reset the benchmark for the entire industry. Nvidia CEO Jensen Huang says Blackwell demand is already “insane,” and I predict this new hardware will be the reason its stock outperforms the rest of the trillion-dollar club yet again in 2025.

Nvidia’s H100 GPU set the benchmark for AI training and inference. The chip went into production in late 2022, and it was the top choice throughout 2023 for data center operators like Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL).

Nvidia has since released the H200 GPU, which can perform AI inference at almost twice the speed of the H100. But Blackwell-based GPU systems like the GB200 NVL72 are capable of performing AI inference at a whopping 30 times the pace of the equivalent H100 setups.

Plus, Huang says individual GB200 GPUs will sell for $30,000 to $40,000 each, which is around the same price many data center operators paid for the H100 when it was released. In other words, Blackwell is going to offer a substantial increase in cost efficiency. That means the largest and most advanced AI models will become financially accessible to a wider number of developers and businesses.

In an interview with CNBC in early October, Huang said demand for Blackwell GPUs is “insane.” According to one analyst, Nvidia could ship up to 200,000 GB200 units in the final quarter of 2024, followed by as many as 550,000 units in the first quarter of 2025. That could translate into as much as $30 billion in data center revenue over the next two quarters from that one chip alone!

Nvidia’s fiscal year is different from the traditional calendar year. The company is currently in fiscal 2025, which will end on Jan. 31, 2025 (three months from now). That will then mark the beginning of its fiscal 2026 year.

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Wall Street’s consensus estimate (according to Yahoo) suggests Nvidia will deliver $125.6 billion in total revenue for the whole of fiscal 2025, representing a 125% increase from fiscal 2024. The company is expected to follow that up with $179.2 billion in revenue in fiscal 2026.

The data center segment will be responsible for the majority of that growth. It accounted for 87% of Nvidia’s total revenue during the fiscal 2025 second quarter (which ended July 28), coming in at a record $26.3 billion — a whopping 154% increase from the year-ago period.

The incredible demand for Blackwell should drive more record results in the coming quarters. Microsoft is rumored to be one of the biggest buyers of the new GPUs. During its fiscal 2024 (which ended June 30), Microsoft spent a staggering $55.7 billion on capital expenditures, most of which went toward AI data center infrastructure and chips. The company has already stated that it will spend even more in fiscal 2025.

Amazon is also on track to spend over $60 billion on AI infrastructure in calendar 2024, and Meta Platforms has told investors it will spend up to $40 billion. Those numbers are likely to climb further in 2025.

Nvidia’s dominant market share in the data center GPU space has afforded it an incredible amount of pricing power, which is driving a surge in its profits. The company generated $54.9 billion in net income over the last four quarters, which translated to $2.21 in earnings per share (EPS).

Based on that EPS figure and Nvidia’s current stock price of $139.56, it trades at a price-to-earnings (P/E) ratio of 63.1. That isn’t cheap at face value — in fact, it’s almost double the 32.1 P/E ratio of the Nasdaq-100 technology index.

However, Wall Street expects Nvidia to generate $4.06 in EPS in fiscal 2026, placing its forward P/E ratio at 34.3. That might be far too cheap for two reasons.

First, Nvidia stock traded at an average P/E ratio of 58.2 for the last 10 years, and it was regularly above 50 even before the AI revolution gripped Wall Street.

Second, as fiscal 2026 progresses, analysts will start issuing their forecasts for fiscal 2027. If Nvidia appears likely to deliver incredible revenue and earnings growth yet again, investors might be willing to pay a much higher P/E ratio for its stock. In other words, 34.3 might be far too attractive to pass up.

So, if Wall Street’s EPS forecast for fiscal 2026 is accurate, and if Nvidia trades in line with its 10-year average P/E ratio, that implies that its stock could rise by 70% or more over the course of next year.

There is no other company in the trillion-dollar club that has anywhere near as much revenue or earnings growth forecasted for next year, which is why I think Nvidia is the obvious choice to outperform.

Huang believes data center operators will spend $1 trillion building AI infrastructure over the next five years, and if he’s right, Nvidia’s incredible run might have legs way beyond 2025.

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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. 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 Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. 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.

Prediction: This Will Be the Best-Performing Stock in the $1 Trillion Club in 2025 was originally published by The Motley Fool

AGNC Investment (NASDAQ: AGNC) is a prolific dividend stock. The mortgage-focused real estate investment trust (REIT) pays a monthly dividend that currently yields over 14%. That’s more than 10 times higher than the S&P 500 (1.3% yield).

The mortgage REIT has paid its monster dividend for 55 months in a row. That’s impressive, considering the market conditions it has endured over the past few years. With the environment expected to be much more positive in the future, the REIT’s monster dividend looks safe.

AGNC Investment has a very simple strategy. It invests in agency mortgage-backed securities (MBSes), which are pools of residential mortgages protected from default risk by government agencies like Fannie Mae. Because of that, these fixed-income investments generate very low-risk returns.

Agency MBSes also have relatively low returns (mid to high single digits). The mortgage REIT can boost its returns by using leverage (i.e., borrowing money) to buy more MBSes. It makes money on the spread between its borrowing costs and the yield on its MBS investments. The wider the spread, the more money it can make.

AGNC Investment has made enough money to cover its current dividend payment for the past four and a half years. That’s noteworthy because the last few years have been a more challenging period in the MBS market due to the significant surge in interest rates. Higher rates have increased the REIT’s borrowing costs, narrowing its investment spread.

However, conditions have never gotten to the point where the REIT felt it needed to cut its dividend, which is something it has had to do several times in the past:

AGNC Investment CEO Peter Federico commented on the ideal market conditions for the REIT in its third-quarter earnings report. He noted, “AGNC’s return opportunities are most favorable when agency MBS spreads to benchmark rates are wide and stable and interest rates and monetary policy are less volatile.” In other words, stable market conditions are ideal because they provide a lot of visibility into its earnings capability.

For much of the last few years, the Agency MBS market has been more volatile due to all the uncertainty surrounding interest rates. However, with the Federal Reserve recently pivoting its policy from fighting inflation with higher interest rates to a more neutral stance with lower rates, the outlook for the agency MBS market is much better than it has been over the past few years. The REIT believes MBS spreads will stabilize at historically favorable levels over the next one to two years as the Fed slowly cuts rates. That should enable the company to make more than enough money to continue covering its high-yielding dividend.

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