Is Opendoor Technologies Inc. (OPEN) a Stock That Should Double in 3 Years?
On April 25, Kari Firestone, Aureus Asset Management executive chairman and co-founder, joined CNBC's 'Squawk Box' to discuss the latest market trends and express how this is a reasonable place for long-term investors to enter the market. Despite persistent concerns about a recession coming from tariffs, Firestone thinks that corporate earnings have generally exceeded expectations. The strong performance of major tech companies has been a key driver behind the market's recent gains, such as those in the MAG7. Elaborating on the significance of these tech giants, Firestone also underscored that the top 2 companies in the S&P 500, regardless of which they are, match the market value of the bottom 300 companies in the index. This concentration means that these leading firms are fundamental to the US economy's progress.
The conversation then addressed the impact of proposed FDA budget cuts on innovation for biotech companies. Firestone agreed that such cuts could slow down the approval process for new products and drug manufacturing, and she advised against reducing the FDA's budget. However, she believes that the market has already priced in these risks. She compared the situation to previous market overreactions, such as the 32% drop during the early COVID-19 period, which was followed by a rapid recovery.
Firestone also concluded that the market is now fairly valued. Some sectors offer attractive opportunities due to recent price declines. She assessed the overall market valuation in light of tariff uncertainties and the recent rebound from a 20% drop to a current decline of about 10.5%. She explained that the market's price-to-earnings multiple has decreased from 22.5x next year's earnings to 18.5x, assuming no severe recession. She's confident that the market is unlikely to end the year lower than current levels and recommends that long-term investors enter the market at this stage. Firestone believes that the market has partially priced in the impact of tariffs. She estimated that a 5% to 10% tariff is reflected in current prices. While a full-blown recession may not be entirely priced in, a slowdown likely is.
We sifted through financial media reports and Reddit threads to compile a list of the top 30 stocks that should double in 3 years. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey's database which tracks the moves of over 1000 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A real estate broker presenting pieces of paper describing the details of a home sale.
Number of Hedge Fund Holders: 20
Opendoor Technologies Inc. (NASDAQ:OPEN) operates a digital platform for residential real estate transactions in the US. It also provides real estate brokerage, title insurance & settlement, escrow services, property & casualty insurance, real estate licenses, and construction services.
In 2024, despite macroeconomic headwinds, Opendoor purchased 30% more homes year-over-year. The contribution margin increased to 4.7%, which was an improvement from the negative 3.7% recorded in 2023. Recognizing the slower start to the 2025 spring selling season and persistent market depression, Opendoor Technologies Inc. (NASDAQ:OPEN) also began increasing spreads in January to better manage risk.
Opendoor is actively enhancing the customer experience to drive higher conversion rates. This includes improvements to its pricing models. Notably, ~70% of the company's 2024 acquisitions originated from sellers who initially declined an offer but later accepted a refreshed one after re-engagement. For Q1 2025, the company anticipates revenue between $1 billion and $1.075 billion.
Overall, OPEN ranks 29th on our list of the stocks that should double in 3 years. While we acknowledge the growth potential of OPEN as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than OPEN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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Stock market today: Dow, S&P 500, Nasdaq mixed as Wall Street eyes earnings, trade tensions
US stocks wavered on Tuesday as investors digested the latest wave of corporate earnings and various tariff updates. The benchmark S&P 500 (^GSPC) slid 0.2%, while the blue-chip Dow Jones Industrial Average (^DJI) rose about 0.1%. The Nasdaq Composite (^IXIC) was down around 0.3%. Palantir (PLTR) stock jumped about 7% in late morning trading after the company's earnings report beat expectations and revealed its revenue had topped $1 billion in a quarter for the first time. On Monday, stocks sharply rebounded after tanking on Friday in the aftermath of a number of market-shaking events, including a weak jobs report, fresh tariffs, new signs of rising prices, and President Trump's firing of the commissioner of the Bureau of Labor Statistics. Meanwhile, Trump continued to amp up pressure on trade Monday, threatening to hike tariffs on India. Separately, in a Tuesday morning interview with CNBC, Trump said pharmaceutical imports could see tariffs of up to 250%. Trump also ruled out Treasury Secretary Scott Bessent as a potential incoming Fed chair, but noted that Jerome Powell's successor could be named "soon." Read more: The latest on Trump's tariffs Wall Street is now focused on the continuation of earnings season. On Tuesday, AMD (AMD) and Rivian (RIVN) are set to report their results. McDonald's (MCD) and Disney (DIS) earnings land Wednesday. However, another trade blow looms later in the week, with Trump's latest iteration of global tariffs set to take effect. AI is the clear risk to the upside for the stock market in 2025 Another Wall Street strategist has boosted their year-end S&P 500 target. In a note to clients on Tuesday, HSBC head of equity strategy for the Americas Nicole Inui boosted her year-end S&P 500 target to 6,400 from 5,600. Inui also detailed a bull-case scenario in which an "AI fueled rally" brings the benchmark index to 7,000 by year-end and a bear-case scenario in which tariff impacts drag the S&P 500 down to 5,700. "We have more confidence in the sustainability of the AI trade than further easing on policy uncertainty," Inui wrote. In other words, the risks are more heavily weighted to the bull case outcome. This reveals a key takeaway from how Wall Street is talking about the potential path higher for an S&P 500 that's already near record highs. The bull case for stocks isn't backed by a call for US economic growth to suddenly inflect higher or interest rate cuts from the Federal Reserve to suddenly spark a broad market rally. As we wrote in Tuesday's Yahoo Finance Morning Brief newsletter, the bull case in stocks is still being driven by AI investment and its ability to push corporate profits higher. "For our bull case scenario to play out, tariff costs would shift mostly to the supplier having a negligible impact on US corporate profits," Inui wrote. "At the same time, AI adoption accelerates and starts to have a real impact on profitability through efficiency gains." 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"July's PMI level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business," Steve Miller, the chair of the Institute for Supply Management Services Business Survey committee, said in the release. "The most common topic among survey panelists remained tariff-related impacts, with a noticeable increase in commodities listed as up in price." Elsewhere on Tuesday, S&P Global's composite PMI, which combines both activity in the services and manufacturing sectors, registered a reading of 55.1 in July, up from 52.9 the month prior. S&P Global chief business economist Chris Williamson said the data signals "encouragingly robust economic growth at the start of the third quarter." Williamson added that the July PMI data points to the US economy growing at a 2.5% annualized pace in the third quarter, above the 1.25% pace seen in the first half. Trump rules out Bessent as next Fed chair, says may name Powell replacement soon Yahoo Finance's Jennifer Schonberger and Myles Udland report: Read more here. Trending tickers in premarket trading: Pfizer, Palantir, Caterpillar Companies reporting earnings topped Yahoo Finance's trending tickers list on Tuesday. Here's a look at how they're trading 30 minutes before the opening bell: Read more live coverage of corporate earnings here. Palantir stock surges on Q2 beat and raise Palantir (PLTR) stock climbed 7% higher in premarket trading on Tuesday following the AI software company's blowout second quarter earnings report on Monday afternoon. Palantir's revenue topped $1 billion in a quarter for the first time as the company dodged government contract spending cuts and reported beat-and-raise results. Year to date, Palantir stock is up 112%. Yahoo Finance's Jake Conley reports: Read more here. Wall Street 2025 bonuses: Winners and losers so far Yahoo Finance's David Hollerith reports: Read more here. Good morning. Here's what's happening today. Economic data: S&P Global US Services PMI (July final) S&P Global US Composite, (July final); ISM services index (July) Earnings: AMD (AMD), BP (BP), Caterpillar (CAT), Duke Energy (DUK), Lucid Group (LCID), Opendoor (OPEN), Pfizer (PFE), Rivian (RIVN), Super Micro Computer (SMCI), Snap (SNAP), Upstart (UPST) Here are some of the biggest stories you may have missed overnight and early this morning: One key reason a slowing economy isn't shaking stock market bulls Wall Street 2025 bonuses: Winners and losers so far Big Tech is power-hungry, and America's aging grid can't keep up Pfizer beats in Q2 earnings, reaffirms 2025 outlook Trump's Fed pick could face resistance from colleagues on rates Intel struggles with key manufacturing process for next chip EU says it expects turbulence in trade relations with US Jefferies sees crowded trade in Big Tech as Fed nears rate cuts US rig decline outpaces efficiency, threatening oil output Autopilot verdict deals Tesla a 'black eye' Pfizer stock rises after beating Q2 earnings, reaffirming 2025 outlook Pfizer (PFE) stock rose 2% in premarket trading Tuesday after beating quarterly estimates on the top and bottom lines. 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AI is the clear risk to the upside for the stock market in 2025 Another Wall Street strategist has boosted their year-end S&P 500 target. In a note to clients on Tuesday, HSBC head of equity strategy for the Americas Nicole Inui boosted her year-end S&P 500 target to 6,400 from 5,600. Inui also detailed a bull-case scenario in which an "AI fueled rally" brings the benchmark index to 7,000 by year-end and a bear-case scenario in which tariff impacts drag the S&P 500 down to 5,700. "We have more confidence in the sustainability of the AI trade than further easing on policy uncertainty," Inui wrote. In other words, the risks are more heavily weighted to the bull case outcome. This reveals a key takeaway from how Wall Street is talking about the potential path higher for an S&P 500 that's already near record highs. The bull case for stocks isn't backed by a call for US economic growth to suddenly inflect higher or interest rate cuts from the Federal Reserve to suddenly spark a broad market rally. As we wrote in Tuesday's Yahoo Finance Morning Brief newsletter, the bull case in stocks is still being driven by AI investment and its ability to push corporate profits higher. "For our bull case scenario to play out, tariff costs would shift mostly to the supplier having a negligible impact on US corporate profits," Inui wrote. "At the same time, AI adoption accelerates and starts to have a real impact on profitability through efficiency gains." Another Wall Street strategist has boosted their year-end S&P 500 target. In a note to clients on Tuesday, HSBC head of equity strategy for the Americas Nicole Inui boosted her year-end S&P 500 target to 6,400 from 5,600. Inui also detailed a bull-case scenario in which an "AI fueled rally" brings the benchmark index to 7,000 by year-end and a bear-case scenario in which tariff impacts drag the S&P 500 down to 5,700. "We have more confidence in the sustainability of the AI trade than further easing on policy uncertainty," Inui wrote. In other words, the risks are more heavily weighted to the bull case outcome. This reveals a key takeaway from how Wall Street is talking about the potential path higher for an S&P 500 that's already near record highs. The bull case for stocks isn't backed by a call for US economic growth to suddenly inflect higher or interest rate cuts from the Federal Reserve to suddenly spark a broad market rally. As we wrote in Tuesday's Yahoo Finance Morning Brief newsletter, the bull case in stocks is still being driven by AI investment and its ability to push corporate profits higher. "For our bull case scenario to play out, tariff costs would shift mostly to the supplier having a negligible impact on US corporate profits," Inui wrote. "At the same time, AI adoption accelerates and starts to have a real impact on profitability through efficiency gains." Countries push for last-minute deals as Thursday tariff deadline looms Yahoo Finance's Ben Wersckul reports: Read more here. Yahoo Finance's Ben Wersckul reports: Read more here. Hims & Hers stock slides 6% after second quarter revenue misses forecasts Yahoo Finance's Jake Conley reports: Read more here. Yahoo Finance's Jake Conley reports: Read more here. PMI data points to 'encouragingly robust' economic activity to start the third quarter Activity in the services continued to expand during the month of July, according to two data releases on Tuesday morning. The Institute for Supply Management's (ISM) services PMI registered a reading of 50.1 in July, down from June's reading of 50.8, and below the 51.5 economists surveyed by Bloomberg had expected. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction. The manufacturing sector has been in contraction for most of the past two years. "July's PMI level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business," Steve Miller, the chair of the Institute for Supply Management Services Business Survey committee, said in the release. "The most common topic among survey panelists remained tariff-related impacts, with a noticeable increase in commodities listed as up in price." Elsewhere on Tuesday, S&P Global's composite PMI, which combines both activity in the services and manufacturing sectors, registered a reading of 55.1 in July, up from 52.9 the month prior. S&P Global chief business economist Chris Williamson said the data signals "encouragingly robust economic growth at the start of the third quarter." Williamson added that the July PMI data points to the US economy growing at a 2.5% annualized pace in the third quarter, above the 1.25% pace seen in the first half. Activity in the services continued to expand during the month of July, according to two data releases on Tuesday morning. The Institute for Supply Management's (ISM) services PMI registered a reading of 50.1 in July, down from June's reading of 50.8, and below the 51.5 economists surveyed by Bloomberg had expected. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction. The manufacturing sector has been in contraction for most of the past two years. "July's PMI level continues to reflect slow growth, and survey respondents indicated that seasonal and weather factors had negative impacts on business," Steve Miller, the chair of the Institute for Supply Management Services Business Survey committee, said in the release. "The most common topic among survey panelists remained tariff-related impacts, with a noticeable increase in commodities listed as up in price." Elsewhere on Tuesday, S&P Global's composite PMI, which combines both activity in the services and manufacturing sectors, registered a reading of 55.1 in July, up from 52.9 the month prior. S&P Global chief business economist Chris Williamson said the data signals "encouragingly robust economic growth at the start of the third quarter." Williamson added that the July PMI data points to the US economy growing at a 2.5% annualized pace in the third quarter, above the 1.25% pace seen in the first half. Trump rules out Bessent as next Fed chair, says may name Powell replacement soon Yahoo Finance's Jennifer Schonberger and Myles Udland report: Read more here. Yahoo Finance's Jennifer Schonberger and Myles Udland report: Read more here. Trending tickers in premarket trading: Pfizer, Palantir, Caterpillar Companies reporting earnings topped Yahoo Finance's trending tickers list on Tuesday. Here's a look at how they're trading 30 minutes before the opening bell: Read more live coverage of corporate earnings here. Companies reporting earnings topped Yahoo Finance's trending tickers list on Tuesday. Here's a look at how they're trading 30 minutes before the opening bell: Read more live coverage of corporate earnings here. Palantir stock surges on Q2 beat and raise Palantir (PLTR) stock climbed 7% higher in premarket trading on Tuesday following the AI software company's blowout second quarter earnings report on Monday afternoon. Palantir's revenue topped $1 billion in a quarter for the first time as the company dodged government contract spending cuts and reported beat-and-raise results. Year to date, Palantir stock is up 112%. Yahoo Finance's Jake Conley reports: Read more here. Palantir (PLTR) stock climbed 7% higher in premarket trading on Tuesday following the AI software company's blowout second quarter earnings report on Monday afternoon. Palantir's revenue topped $1 billion in a quarter for the first time as the company dodged government contract spending cuts and reported beat-and-raise results. Year to date, Palantir stock is up 112%. Yahoo Finance's Jake Conley reports: Read more here. Wall Street 2025 bonuses: Winners and losers so far Yahoo Finance's David Hollerith reports: Read more here. Yahoo Finance's David Hollerith reports: Read more here. Good morning. Here's what's happening today. Economic data: S&P Global US Services PMI (July final) S&P Global US Composite, (July final); ISM services index (July) Earnings: AMD (AMD), BP (BP), Caterpillar (CAT), Duke Energy (DUK), Lucid Group (LCID), Opendoor (OPEN), Pfizer (PFE), Rivian (RIVN), Super Micro Computer (SMCI), Snap (SNAP), Upstart (UPST) Here are some of the biggest stories you may have missed overnight and early this morning: One key reason a slowing economy isn't shaking stock market bulls Wall Street 2025 bonuses: Winners and losers so far Big Tech is power-hungry, and America's aging grid can't keep up Pfizer beats in Q2 earnings, reaffirms 2025 outlook Trump's Fed pick could face resistance from colleagues on rates Intel struggles with key manufacturing process for next chip EU says it expects turbulence in trade relations with US Jefferies sees crowded trade in Big Tech as Fed nears rate cuts US rig decline outpaces efficiency, threatening oil output Autopilot verdict deals Tesla a 'black eye' Economic data: S&P Global US Services PMI (July final) S&P Global US Composite, (July final); ISM services index (July) Earnings: AMD (AMD), BP (BP), Caterpillar (CAT), Duke Energy (DUK), Lucid Group (LCID), Opendoor (OPEN), Pfizer (PFE), Rivian (RIVN), Super Micro Computer (SMCI), Snap (SNAP), Upstart (UPST) Here are some of the biggest stories you may have missed overnight and early this morning: One key reason a slowing economy isn't shaking stock market bulls Wall Street 2025 bonuses: Winners and losers so far Big Tech is power-hungry, and America's aging grid can't keep up Pfizer beats in Q2 earnings, reaffirms 2025 outlook Trump's Fed pick could face resistance from colleagues on rates Intel struggles with key manufacturing process for next chip EU says it expects turbulence in trade relations with US Jefferies sees crowded trade in Big Tech as Fed nears rate cuts US rig decline outpaces efficiency, threatening oil output Autopilot verdict deals Tesla a 'black eye' Pfizer stock rises after beating Q2 earnings, reaffirming 2025 outlook Pfizer (PFE) stock rose 2% in premarket trading Tuesday after beating quarterly estimates on the top and bottom lines. The company posted earnings per share of $0.78, versus estimates of $0.58 per share, on revenue of $14.7 billion, compared to Wall Street expectations of $13.5 billion. Yahoo Finance's Anjalee Khemlani reports: Read more here. Pfizer (PFE) stock rose 2% in premarket trading Tuesday after beating quarterly estimates on the top and bottom lines. The company posted earnings per share of $0.78, versus estimates of $0.58 per share, on revenue of $14.7 billion, compared to Wall Street expectations of $13.5 billion. Yahoo Finance's Anjalee Khemlani reports: Read more here. One key reason a slowing economy isn't shaking stock market bulls Yahoo finance's senior reporter Josh Schafer looks at why softening economic data may not be as important for stocks as AI: Read more here. Yahoo finance's senior reporter Josh Schafer looks at why softening economic data may not be as important for stocks as AI: Read more here. Nvidia partner Hon Hai's July sales growth weakened by tariffs Nvidia's (NVDA) main server assembly partner Hon Hai Precision ( saw its Taiwan stock close 2% higher on Tuesday despite reporting a sales slowdown for July. Bloomberg News reports: Read more here. Nvidia's (NVDA) main server assembly partner Hon Hai Precision ( saw its Taiwan stock close 2% higher on Tuesday despite reporting a sales slowdown for July. Bloomberg News reports: Read more here. Oil flattened from multi-day drop after Trump's India rebuke Oil prices steadied from a three-day decline following a ramping up of threats from Trump to India over the Asian nation's continued use of Russian crude. Bloomberg reports: Read more here. Oil prices steadied from a three-day decline following a ramping up of threats from Trump to India over the Asian nation's continued use of Russian crude. Bloomberg reports: Read more here. Sign in to access your portfolio
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Can $10,000 in O'Reilly Automotive Stock Turn Into $61,917 by 2035?
Key Points O'Reilly Automotive has been an amazing stock performer. It's a somewhat recession-resistant business, too. But think twice before buying great stocks at any price. 10 stocks we like better than O'Reilly Automotive › So, you're interested in O'Reilly Automotive (NASDAQ: ORLY) stock. Who could blame you? It's been a terrific performer for many years, making lots of shareholders richer. You might be wondering whether it could make you richer, too. Well, it might, but there are a few issues to consider. For starters, let's review the stock's recent performance over time: Period Average Annual Gain Past 3 years 28.23% Past 5 years 26.62% Past 10 years 19.89% Past 15 years 25.53% Data source: as of July 29, 2025. I posed the question of whether you could turn $10,000 into $61,917 in a decade with O'Reilly stock because that's what would happen with average annual gains of 20%. Looking at the table above, you might think that achieving 20% average gains will be easy. That's not necessarily true, though -- because the stock's price seems a bit overheated at recent levels -- without much margin of safety. If the shares were undervalued, aiming for 20% gains would seem more reasonable. But if the shares are overvalued, then they've gotten ahead of themselves and may well pull back before advancing again. Consider these measures: O'Reilly's recent forward-looking price-to-earnings (P/E) ratio of 33.4 is well above its five-year average of 23.2. And its recent price-to-sales ratio of 5.0 is well above its five-year average of 3.7. Given all that, I won't be buying shares anytime soon. But the stock is worth adding to your watchlist in the hope of a better, lower price. It has many points in its favor. For one thing, its business is recession-resistant, should a recession rear its ugly head. When people's cars have issues, they will simply need to buy parts and supplies. And the average age of cars in America has increased recently. O'Reilly Automotive is growing well, too, posting revenue and earnings increases of 6% and 11%, respectively, in its solid second quarter. Growth investors might keep an eye on O'Reilly, but income investors should look elsewhere, as it doesn't yet pay a dividend. Should you invest $1,000 in O'Reilly Automotive right now? Before you buy stock in O'Reilly Automotive, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and O'Reilly Automotive 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 $631,505!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,103,313!* Now, it's worth noting Stock Advisor's total average return is 1,039% — a market-crushing outperformance compared to 181% 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 August 4, 2025 Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Can $10,000 in O'Reilly Automotive Stock Turn Into $61,917 by 2035? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Is It Worth Buying the S&P 500 at an All-Time High? 3 Things Investors Should Consider.
Key Points Taking on outsized risk with a short time horizon is a great way to lose your shirt in the market. Be aware of how the S&P 500 can complement or duplicate your existing holdings. The S&P 500 is not a great way to generate passive income. 10 stocks we like better than S&P 500 Index › The S&P 500 (SNPINDEX: ^GSPC) is just 1.5% away from its all-time high as of this writing. Some investors may be wondering if the index and many top stocks are still worth buying now, or if valuations are getting overextended. Here are some factors to consider when approaching broad market fluctuations and how the S&P 500 could fit into your portfolio. 1. Time horizon One of the most effective ways to compound wealth is through buying and holding shares in quality companies over a long time period. And yet, human nature can make it challenging to buy stocks trading at their all-time high, even though history shows it's often a good idea. Therefore, one of the most important factors to consider when approaching a red-hot market is your time horizon. A long-term position gives volatility time to play out, whereas a short-term holding is more susceptible to temporary price swings. Data from MacroMicro shows that the forward price-to-earnings ratio of the S&P 500 is 22.3, higher than the five-year moving average of 20.9 and the one-year average of 20.2. So the broader market, in general, is on the expensive side. A pricey market is no big deal if you're investing for a retirement that's decades away because the focus is on years of compounding returns rather than what's happening on a quarterly or yearly basis. But if you're investing with a shorter time horizon, valuations will matter more. This is why it's always better to take the pressure off your portfolio by adopting longer-term holding periods. 2. The S&P 500's impact on your portfolio Buying the S&P 500 provides exposure to 500 of the top U.S. companies. But in reality, it's not as diversified as you many think. Investing $10,000 in the S&P 500, as represented by the Vanguard S&P 500 ETF (NYSEMKT: VOO), is really $730 in Nvidia, $703 in Microsoft, $583 in Apple, $394 in Amazon, and so on. The S&P 500 is much more top-heavy today than it was in the past. Not only is half of the index invested in just 25 companies, but the vast majority of the index is concentrated in just a handful of sectors. Technology, communications, and consumer discretionary have a combined 53.3% weighting. So before adding more of your hard-earned savings to the index, it's essential to be comfortable with its composition. Arguably, the best reason not to buy the S&P 500 at an all-time high is if you're trying to diversify your portfolio but already own a lot of the index's top names. Another reason to avoid the index is if you're trying to invest in mid-cap or small-cap stocks that carry tiny, often negligible weightings in the index (or none at all). Pairing holdings in individual stocks with positions in ETFs is a great way to adjust your portfolio weightings based on your conviction in certain names. For example, let's say that you think Advanced Micro Devices is a great buy because it will take market share from Nvidia. The S&P 500 has just a 0.5% weighting in AMD, compared to 7.7% for Nvidia, so buying the S&P 500 effectively doubles down on the very company this hypothetical investor believes can be disrupted. In such a scenario, it makes more sense to invest directly in AMD as a way to counteract Nvidia's outsized representation in an S&P 500 fund. 3. Financial goals Another good reason not to buy the S&P 500 is if it doesn't align with your investment objectives. The S&P 500 can be an excellent way to compound wealth over time, but it's no longer a good way to generate passive income. The index yields just 1.2% compared to 2.1% about a decade ago. The yield has gone down as valuations have increased, and growth stocks (many of which don't pay dividends or have low yields) have expanded their weightings in the index. Investors looking to invest in the stock market with an emphasis on passive income may want to consider dividend-paying stocks or ETFs with higher yields. Coca-Cola has a 3% yield, a track record of earnings growth, and 63 consecutive years of boosting its payout. Buying Coca-Cola and other top dividend stocks offers a way to collect a sizable amount of passive income while still participating in the market, rather than using a passive income strategy that focuses solely on yield with little upside potential. Only buy the S&P 500 if it works for you Over time, the best-performing companies are typically those that reinvest the bulk of their excess earnings into the underlying business to accelerate growth. Good ideas combined with deep pockets can create jaw-dropping results, as reflected in the S&P 500's epic long-term gains and shift toward tech-focused companies. Even near its all-time high valuation, the S&P 500 is still a great buy for most long-term investors. However, it's a mistake to buy the S&P 500 without considering how its composition factors into your existing holdings and investment objectives. Should you buy stock in S&P 500 Index right now? Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index 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 $631,505!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,103,313!* Now, it's worth noting Stock Advisor's total average return is 1,039% — a market-crushing outperformance compared to 181% 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 August 4, 2025 Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. 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. Is It Worth Buying the S&P 500 at an All-Time High? 3 Things Investors Should Consider. was originally published by The Motley Fool
