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Globe and Mail
2 hours ago
- Globe and Mail
3 Artificial Intelligence (AI) Stocks That Still Look Like Long-Term Winners
When you consider whether to invest in a company for the long term, you'll often find that stocks fall into two groups. The first includes stocks of companies that have done well. For those, it's about whether they can continue to perform at a high level. The other consists of flawed stocks, companies facing adversity or potential challenges that may deter investors. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Palantir Technologies (NASDAQ: PLTR), Apple (NASDAQ: AAPL), and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) are three well-known technology stocks representing a mix of both groups. Palantir has been one of the market's biggest winners in artificial intelligence (AI), while investors wonder whether Apple and Alphabet are losing their edge. Here is the skinny on each name and why all three can still be long-term winners. 1. This AI stock continues to defy gravity Palantir Technologies continues to chug higher, racking up a blistering 2,100% gain since 2023. The company has become a leader in developing AI software on its proprietary platforms for government and enterprise customers. And since launching AIP, its AI-focused platform, in mid-2023, Palantir's growth has continued to accelerate. The company still has fewer than 500 commercial customers in the United States, a tiny fraction of the country's 20,000 large corporations. Then, you factor in Palantir's close military ties (government contracts accounted for 55% of revenue in Q1 2025) at a time when America is involved in numerous geopolitical conflicts, and it's easy to envision years of high-speed growth. Despite its best efforts, Palantir's business hasn't kept pace with its share price. The stock has rocketed to a forward P/E ratio of 245, which is excessive, to say the least, for a business expected to compound earnings at an annualized rate of 31% over the long term. Given its growth momentum, both in the government and with commercial customers, Palantir's business appears poised to continue winning. That said, investors will probably want to wait for some significant dips to buy the stock at a more reasonable valuation. 2. Should investors worry about Apple's slow start in AI? AI seemed like a layup for Apple, with a wide-moat ecosystem spanning more than 2.35 billion active iOS devices worldwide. All Apple has needed to do is integrate AI capabilities into its iOS platform, and it would instantly be one of the leading consumer-facing AI companies, if not the leader. Yet Apple has struggled to launch notable AI features smoothly, and its underwhelming rollout of Apple Intelligence, its first attempt at AI, compelled the company to reorganize its AI team. The good news is that Apple's iOS remains one of the stickiest consumer ecosystems, which buys time for Apple to figure things out. People buy Apple products and use them for several years. The devices, whether it's a phone, computer, tablet, or watch, sync and work together. People become accustomed to iOS and develop a commitment to the ecosystem. Users may drift away from Apple eventually if it doesn't figure out AI, but it's unlikely that Apple's user base would implode overnight. Ultimately, Apple is a behemoth, a financial juggernaut with one of the world's most influential brands. While Apple may not deliver the same type of returns as in years past at a $3 trillion market cap, the stock should have a relatively high floor, based on the company's massive stock buybacks, growing dividend, and sticky business model. It's worth the leap of faith that Apple will solve its AI frustrations. 3. Is AI an opportunity or a threat to Google? Google's parent company, Alphabet, is facing some pressure from several directions. AI models have become popular enough to begin siphoning traffic away from traditional search engines, like Google. At the same time, U.S. regulators have successfully pursued litigation against Alphabet for anti-competitive practices, which could result in fines or even forced divestitures that would potentially impact its core advertising business. The adversity has one of the world's most prominent technology stocks trading at a P/E ratio of just 19 today. Yet, AI is arguably more an opportunity than a threat. Alphabet has integrated AI summaries into its search results, successfully monetizing them. Despite all the worries about AI, Google's ad revenue still grew by 10% in Q1 2025. Plus, Google Cloud is growing in size and profitability due to AI boosting demand for cloud services. If that weren't enough, Alphabet's autonomous ride-hailing business, Waymo, is continuing to expand its footprint across the United States and could eventually become a significant piece of Alphabet's business. When you put it all together, it seems that this technology giant will continue to remain a prominent force across the AI and technology space. That's an easy bet to make when the stock trades near its lowest valuation of the past decade. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, 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 Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor 's total average return is1,062% — a market-crushing outperformance compared to177%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025


Globe and Mail
2 hours ago
- Globe and Mail
Tesla Stock Investors Just Got Bad News From Wall Street, but There's a Silver Lining
Tesla (NASDAQ: TSLA) shares have tumbled 20% this year, while the S&P 500 (SNPINDEX: ^GSPC) has jumped 5%. Poor financial results driven by market share losses are the main source of consternation, but CEO Elon Musk has arguably damaged the brand with his behavior. Indeed, Musk has managed to upset both political parties. His support for President Donald Trump and work with the Department of Government Efficiency have irritated Democrats, while his criticism of the "One, Big, Beautiful Bill" and the subsequent feud with Trump have tanked his popularity with Republicans. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Unfortunately, the bad news continues to roll in for Tesla. Consensus earnings estimates among Wall Street analysts have been revised sharply lower in the last 90 days due to headwinds surrounding the core automotive business. Here's what investors should know. Tesla is losing market share, and Wall Street is cutting earnings estimates Tesla's deliveries have declined in three of the last five quarters as demand for its aging lineup of electric cars has nosedived amid high interest rates and political backlash. The decline accelerated in the first quarter of 2025, as Tesla's automotive revenue fell by 20%, and non-GAAP (non-generally accepted accounting principles) net income dropped by 40%. Management laid the blame in part on factory updates required for the recently introduced Model Y Juniper. However, the production lines have been refreshed, and the company is still losing ground. Through April, U.S. market share dropped by 9 percentage points, European market share by 8 percentage points, and Chinese market share by 3 percentage points. Those market share losses are particularly discouraging because many automakers have seen robust demand for electric cars this year. In fact, global electric car sales soared 38% through April, according to Morgan Stanley. Additionally, despite domestic manufacturing capacity, Tesla relies on imported auto parts, which are now subject to a 25% tariff. That headwind, coupled with market share losses, has caused analysts to cut earnings forecasts. Consensus estimates for 2025 and 2026 have dropped by 25% and 16%, respectively, in the last three months, according to LSEG. Here's the big picture: Wall Street now expects Tesla's adjusted earnings to increase at 14% annually through 2026. That consensus makes the current valuation of 145 times adjusted earnings look absurdly expensive. Those figures indicate a price-to-earnings-to-growth (PEG) ratio of over 10. Multiples above 2 or 3 are generally considered overvalued. Autonomous ride-sharing is the silver lining for Tesla shareholders Tesla recently launched its long-awaited autonomous ride-sharing service, albeit on a very limited scale. Roughly a dozen robotaxis hit the streets in Austin, Texas, on June 22, though rides are currently restricted to invitees. Reuters reported a handful of problematic driving incidents during the debut, but nothing overly worrisome and certainly no accidents. Tesla has been developing its full self-driving (FSD) platform for over a decade, and its approach differs from that of Alphabet 's Waymo, the market leader. Waymos are outfitted with a costly array of cameras, radar, and lidar, and their robotaxis use high-definition maps to navigate. But Teslas are outfitted only with cameras and rely solely on computer vision to navigate, which is more cost-efficient and scalable. Autonomous ride-sharing promises to be a substantial opportunity for Tesla. RBC analyst Tom Narayan estimates that the company could earn $115 billion in robotaxi revenue in 2040, which he says could equate to about $50 billion in profits. Morgan Stanley analyst Adam Jonas estimates that the company could earn $700 billion in robotaxi revenue in 2040, which he says could equate to about $120 billion in profits. Either way, Tesla could be much more profitable in the future as its focus shifts from low-margin electric car manufacturing to high-margin robotaxi services. Indeed, Elon Musk says Tesla could eventually be the most valuable company in the world as it monetizes its FSD platform and robotics products. That is undoubtedly a silver lining for shareholders in what has been a disappointing year. Don't miss this second chance at a potentially lucrative opportunity 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 $409,114!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $38,173!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $713,547!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon. See the 3 stocks » *Stock Advisor returns as of June 23, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Tesla. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy.


Globe and Mail
3 hours ago
- Globe and Mail
2 Popular AI Stocks to Sell Before They Drop 50% and 69%, According to Wall Street Analysts
Palantir Technologies (NASDAQ: PLTR) and Super Micro Computer (NASDAQ: SMCI) are two of the most popular artificial intelligence (AI) stocks on the market. Since January 2023, Palantir has returned 1,900%, and Supermicro has returned 480%. But certain Wall Street analysts think the stocks are wildly overvalued. Rishi Jaluria at RBC Capital recently set a target price of $40 per share for Palantir. That implies 69% downside from its current share price of $130. Mike Ng at Goldman Sachs recently set a target price of $24 per share for Supermicro. That implies 50% downside from its current share price of $48. Here's what investors should know about Palantir and Supermicro. Palantir Technologies: 69% implied downside Palantir develops data analytics and artificial intelligence (AI) software for customers in the commercial and government sectors. International Data Corporation has ranked the company as the market leader in decision-intelligence platforms, and Forrester Research has recognized its technology leadership in AI platforms, a market forecast to grow at 40% annually through 2028. Palantir reported solid first-quarter financial results. Revenue jumped 39% to $884 million, the seventh consecutive acceleration, driven by particularly strong sales growth in the U.S. commercial and government segments. Non-GAAP (non-generally accepted accounting principles) net income increased by 62% to $0.13 per diluted share. Management also raised its full-year guidance, with sales now expected to increase by 36% in 2025. In short, Palantir has a strong presence in a quickly growing industry, and the company is evidently executing on that opportunity. The problem is valuation. Wall Street expects the company's adjusted earnings to increase by 31% annually through 2026. That makes the current valuation of 280 times adjusted earnings look absurdly rich. Alternatively, Palantir currently trades at 105 times sales. No other company in the S&P 500 has a price-to-sales multiple above 35. That means Palantir's share price could drop 66% and it would still be the most expensive stock in the S&P 500. I doubt the stock will fall 69% (as Rishi Jaluria anticipates), but I think shareholders should maintain very small positions. The slightest bit of bad news could cause this stock to crash. Super Micro Computer: 50% implied downside Super Micro Computer develops data center servers and storage solutions, including rack-scale systems optimized for artificial intelligence and other high-performance computing applications. The company says its internal design capabilities and modular approach to product development enable it to bring new technologies to market very quickly, often months ahead of its competitors. Supermicro accounted for 6.5% of global server sales during the fourth quarter of 2024, second only to Dell Technologies, which had a 7.2% revenue share. More importantly, Supermicro has emerged as the early leader in AI servers, a market forecast to grow by 37% annually through 2030, due to its rapid time-to-market capabilities. Some analysts think Supermicro will lose market share as competition increases because there is nothing about its business model that cannot be replicated. Supermicro is not responsible for the innovation; it simply assembles chips built by other companies, such as Nvidia, into servers. Also, KeyBanc analysts argue that Supermicro has "structurally lower margins" because it owns fewer patents than its peers. Supermicro reported disappointing financial results for the third quarter of fiscal 2025, which ended in March. Revenue increased by 19% to $5.6 billion, gross margin contracted by 2 percentage points, and non-GAAP net income fell 53% to $0.31 per diluted share. The company also cut its full-year guidance for the second time in as many quarters. Revenue is now expected to grow 49% in fiscal 2025, down from the initial forecast that called for 87% growth. Wall Street expects Supermicro's adjusted earnings to grow by 18% annually through fiscal 2026, which ends in June 2026. That consensus makes the current valuation of 21 times adjusted earnings look reasonable, but analysts may be overestimating the company. Supermicro has missed the consensus earnings estimate by an average of 17% in the last four quarters. Personally, I doubt the stock will drop 50% (as Mike Ng anticipates), though history suggests that sort of volatility is possible. But investors should limit stock purchases to companies with a durable competitive moat, and I'm not sure Supermicro satisfies that criterion. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, 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 Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor 's total average return is1,062% — a market-crushing outperformance compared to177%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025