Will Coca-Cola's Coffee Bet Perk Up Its Global Beverage Sales?
Management acknowledged that the investment hypothesis has not fully materialized, with much of Costa's growth still concentrated in physical locations rather than diversified platforms.
That said, Coca-Cola is not backing off on the coffee opportunity. With the category being large, fragmented and still growing globally, the company is reassessing its strategy. Management emphasized the importance of reflecting on past learnings and exploring avenues for expansion. Despite underperformance relative to expectations, Costa remains a profitable and strategically important brand. Coca-Cola has focused on affordability, store refreshment and speed of service to stabilize Costa's performance while it works on longer-term transformation initiatives.
Looking ahead, KO is likely to pursue a more measured and insight-driven approach to coffee. With the beverage giant already boasting $30-billion brands and a deep innovation pipeline, Costa's transformation will hinge on its ability to tap into global consumption trends and leverage Coca-Cola's system capabilities. While the coffee bet has not perked up global sales meaningfully, it remains a strategic growth lever with untapped potential if execution aligns with evolving consumer behavior.
KO's Peers Deepen Coffee Ambitions: PEP & KDP Step Up Their Game
Apart from Coca-Cola, PepsiCo Inc. PEP and Keurig Dr Pepper Inc. KDP have been steadily brewing their presence in the global coffee arena, each leveraging unique brand partnerships and distribution strengths to tap into the high-growth category.
PepsiCo's coffee presence remains limited, with no direct updates in its second-quarter 2025 remarks regarding new coffee-specific products or partnerships. While PEP continues to see strong growth across segments like zero-sugar sodas, functional hydration and prebiotic beverages like poppi, coffee is not yet a core focus. However, with an emphasis on expanding in fast-growing beverage categories and improving channel presence, PepsiCo can still explore selective coffee innovations or partnerships in the future.
Keurig Dr Pepper's coffee business showed sequential improvement in second-quarter 2025, led by better pod pricing and resilient volume trends. While brewer shipments remained pressured due to tight retailer inventory, point-of-sale consumption was stable. The company is expanding into premium and cold segments, with Lavazza dessert-inspired K-Cups and La Colombe RTD coffee gaining traction. Though near-term performance faces cost and tariff headwinds, KDP remains focused on long-term growth via innovation and next-gen systems.
The Zacks Rundown for Coca-Cola
KO shares have risen 10.9% year to date compared with the industry 's growth of 3.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, Coca-Cola trades at a forward price-to-earnings ratio of 22.11X, significantly higher than the industry's 17.39X.
The Zacks Consensus Estimate for KO's 2025 and 2026 earnings implies year-over-year growth of 3.1% and 8.3%, respectively. Earnings estimates for 2025 have been unchanged in the past 30 days.
Coca-Cola currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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CocaCola Company (The) (KO): Free Stock Analysis Report
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Keurig Dr Pepper, Inc (KDP): Free Stock Analysis Report
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As the creator of the most advanced graphics processing units (GPUs) that top companies use to power their AI platforms, Nvidia has grown to be the most valuable publicly traded company in the world and was the first to crack the $4 trillion milestone. Nvidia's GPUs can be combined with other chips into clusters that can work faster and more powerfully, which is why they are so prized by companies building AI applications. Jon Peddie Research estimates that Nvidia has a staggering 92% of the GPU market. The company will report earnings for its second quarter of fiscal 2026 on Aug. 27, and analysts are expecting another blowout quarter. Of 66 analysts who cover Nvidia on Yahoo! Finance, 59 of them rank Nvidia as a buy or strong buy. Alphabet Alphabet already reported its quarterly earnings, and Wall Street was impressed. Revenue in Q2 was up 14% to 96.4 billion, while net income was up 19% to $28.19 billion. Alphabet's earnings per share also jumped to $2.31, a 22% gain from a year ago. The report was a welcome return to form for Alphabet, which has struggled so far in 2025 amid concerns that platforms such as ChatGPT would eat into the company's massive Google search business. There are also legal issues, as Alphabet is battling with the Justice Department over allegations that it has an illegal monopoly, and there are concerns that the company could be split up. But Alphabet has been able to put those concerns to rest, at least for now. Revenue from Google Cloud was particularly strong in the second quarter, rising 32% to $13.6 billion, as the company's Google AI platform is incorporated into its Chrome browser and Google search engine. Alphabet also saw strong growth in Google Search (revenue was up 11.7%) and Google Advertising (up 10.4%). Alphabet's stock also trades at a low 20.6 price-to-earnings ratio --incredibly attractive for a tech stock that continues to show strong growth. Taiwan Semiconductor Manufacturing This one goes hand-in-hand with Nvidia, really. If you believe in the growth story powering Nvidia's GPUs, then Taiwan Semiconductor, also known as TSMC, has the same kind of tailwinds. TSMC is a fabricator of GPUs -- it doesn't design them, but it is one of the biggest companies in the world that actually makes them for Nvidia and others. It's a rapidly growing field, as Mordor Intelligence says the GPU market will be $82.7 billion this year and explode to $352.5 billion by 2030. TSMC has an estimated 62% market share of the global foundry market, so it's going to benefit no matter which company has the lead in the GPU race over the next decade. Nvidia's major competitor, Advanced Micro Devices, is also a TSMC customer. TSMC is also growing its footprint in the U.S. rapidly, with plans to invest $165 billion in facilities in Arizona that should shield it from any tariff concerns in the future. TSMC's Q2 earnings included revenue of $30.07 billion, up 44.4% from a year ago. The company is projecting Q3 revenue even higher, to be between $31.8 billion and $33 billion. The bottom line Each of these companies is at the forefront of the explosive growth in AI, which is the dominant trend driving the stock market today. All of them would be excellent buys in August to capitalize on the market-driving power of tech stocks. Where to invest $1,000 right now When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor's total average return is 1,026%* — a market-crushing outperformance compared to 180% for the S&P 500. They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor. See the stocks » *Stock Advisor returns as of August 4, 2025
