Stocks Rebound Ahead of Earnings from Microsoft and Meta Platforms
The S&P 500 Index ($SPX) (SPY) Wednesday closed up +0.15%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.35%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.13%. June E-mini S&P futures (ESM25) are up +0.19%, and June E-mini Nasdaq futures (NQM25) are up +0.21%.
Stock indexes recovered from early losses on Wednesday and settled slightly higher. Stocks found support from Wednesday's news that showed the Fed's preferred inflation gauge, the US Mar core PCE price index, rose at the slowest pace in 9 months. Also, March personal spending rose more than expected, and March pending home sales posted their biggest increase in 15 months. In addition, late-day short covering lifted stock indexes into positive territory ahead of earnings results from Microsoft and Meta Platforms after Wednesday's close.
On Wednesday, stocks initially moved lower after weak economic news bolstered concerns about an economic slowdown. Stagflation risks increased and undercut stocks after Wednesday's reports showed the US economy in Q1 contracted at the steepest pace in 3 years, and the Q1 core PCE price index rose more than expected. Also, signs of labor market weakness undercut stocks after the April ADP employment change showed employers added fewer jobs than expected. However, The Fed-friendly news knocked the 10-year T-note yield down to a 3-week low, improving the prospects for Fed rate cuts.
Corporate earnings results on Wednesday were mixed for stocks. Seagate Technology Holdings rose more than +11% after reporting stronger-than-expected Q1 revenue. Also, Trane Technologies rose more than +8% after reporting Q1 adjusted EPS from continuing operations above consensus. On the negative side, Super Micro Computer fell more than -11% to weigh on tech stocks after reporting preliminary Q3 results that missed expectations. Also, Norwegian Cruise Line Holdings fell more than -7% after saying it saw 'softening' in its 12-month forward bookings.
Weaker-than-expected manufacturing activity in China is negative for global growth prospects after Wednesday's news showed China's Apr manufacturing PMI fell -1.5 to 49.0, weaker than expectations of 49.7 and the steepest pace of contraction in 16 months.
The Treasury announced it will sell $125 billion of T-notes and T-bonds in next week's quarterly refunding, right on expectations.
US MBA mortgage applications fell -4.2% in the week ended April 25, with the purchase mortgage sub-index down -4.4% and the refinancing sub-index down -3.7%. The average 30-year fixed rate mortgage fell -1 bp to 6.89% from 6.90% in the prior week.
The US Apr ADP employment change rose +62,000, weaker than expectations of +115,000 and the smallest increase in 9 months.
US Q1 GDP fell -0.3% (q/q annualized), weaker than expectations of -0.2% and the steepest pace of contraction in 3 years. The Q1 core PCE price index rose +3.5% q/q, stronger than expectations of +3.1% q/q.
The US Q1 employment cost index rose +0.9%, which is right on expectations.
The US Apr MNI Chicago PMI fell -3.0 to 44.6, weaker than expectations of 45.9.
US Mar personal spending rose +0.7% m/m, stronger than expectations of +0.6% m/m. May personal income rose +0.5% m/m, stronger than expectations of +0.4% m/m.
The US Mar core PCE price index, the Fed's preferred inflation gauge, rose +2.6% y/y, right on expectations and the slowest pace of increase in 9 months.
US Mar pending home sales rose +6.1% m/m, stronger than expectations of +1.0% m/m and the biggest increase in 15 months.
Market attention for the rest of this week will focus on news of US tariffs and trade negotiations. On Thursday, the Apr ISM manufacturing index is expected to fall -1.0 to 48.0. Thursday also brings earnings results from Amazon.com and Apple. Friday brings Apr nonfarm payrolls (expected +130,000) and the Apr unemployment rate (expected unchanged at 4.2%). Also, Apr average hourly earnings are expected to climb +0.3% m/m and +3.9% y/y.
The markets are discounting the chances at 8% for a -25 bp rate cut after the May 6-7 FOMC meeting.
Q1 earnings reporting season is in full swing. According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November. So far, just over a third of S&P 500 companies have reported quarterly results, with 75% beating estimates. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January.
Overseas stock markets on Wednesday settled mixed. The Euro Stoxx 50 closed down -0.03%. China's Shanghai Composite fell to a 1-week low and closed down -0.23%. Japan's Nikkei Stock 225 closed up +0.57%.
Interest Rates
June 10-year T-notes (ZNM2 5) Wednesday closed up +3 ticks. The 10-year T-note yield fell -0.4 bp to 4.168%. June T-notes climbed to a 3-week high Wednesday, and the 10-year T-note yield dropped to a 3-week low of 4.133%. T-notes moved higher Wednesday on positive carryover from rallies in European government bonds. T-notes also garnered support after the US Apr ADP employment change rose less than expected, and the Q1 employment index rose as expected, dovish factors for Fed policy. T-notes fell from their best levels today after the US Q1 core PCE price index rose more than expected, a hawkish factor for Fed policy.
European government bond yields on Wednesday moved lower. The 10-year German bund yield dropped to a 1-week low of 2.440% and finished down -5.3 bp to 2.444%. The 10-year UK gilt yield fell to a 3-week low of 4.428% and finished down -3.9 bp to 4.441%.
Eurozone Q1 GDP rose +0.4% q/q and +1.2% y/y, stronger than expectations of +0.2% q/q and +1.1% y/y.
German Mar retail sales fell -0.2% m/m, a smaller decline than expectations of -0.4% m/m.
German Apr CPI (EU harmonized) rose +2.2% y/y, stronger than expectations of +2.1% y/y, but still the slowest pace of increase in 7 months.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the June 5 policy meeting.
US Stock Movers
Seagate Technology Holdings (STX) closed up more than +11% to lead gainers in the S&P 500 after reporting Q1 revenue of $2.16 billion, stronger than the consensus of $2.13 billion.
Qorvo (QRVO) closed up more than +14% after reporting Q4 adjusted EPS of $1.42, well above the consensus of 99 cents.
Trane Technologies (TT) closed up more than +8% after reporting Q1 adjusted EPS from continuing operations of $2.45, better than the consensus of $2.20.
Western Digital (WDC) closed up more than +7% after forecasting Q4 revenue of $2.3 billion to $2.6 billion and declared a cash dividend of 10 cents a share.
PPG Industries (PPG) closed up more than +4% after reporting Q1 adjusted EPS of $1.72, better than the consensus of $1.64, and forecast full-year adjusted EPS of $7.75-$8.05, the midpoint above the consensus of $7.80.
Booking Holdings (BKNG) closed up more than +3% after reporting Q1 revenue of $4.76 billion, stronger than expectations of $4.59 billion.
Mondelez International (MDLZ) closed up more than +3% to lead gainers in the Nasdaq 100 after reporting Q1 adjusted EPS of 74 cents, stronger than the consensus of 66 cents.
GE HealthCare (GEHC) closed up more than +3% after reporting Q1 revenue of $4.78 billion, stronger than the consensus of $4.66 billion.
Energy stocks retreated Wednesday after WTI crude prices fell more than -3% to a 3-week low. APA Corp (APA) closed down more than -4%, and Diamondback Energy (FANG), Haliburton (HAL), and ConocoPhillips (COP) closed down more than -3%. Also, Devon Energy (DVN), Exxon Mobil (XOM), Chevron (CVX), Schlumberger (SLB), and Occidental Petroleum (OXY) closed down more than -2%.
Super Micro Computer (SMCI) closed down more than -12% to lead gainers in the S&P 500 after reporting preliminary Q3 net sales of $4.5 billion to $4.6 billion, well below the consensus of $5.35 billion.
Edison International (EIX) closed down more than -8% after saying its equipment 'could have' been linked to the ignition of the Eaton fire in California and that the company would probably incur material losses in connection with it.
Garmin Ltd (GRMN) closed down more than -8% after forecasting full-year pro forma EPS of $7.80, below the consensus of $7.91.
Starbucks (SBUX) closed down more than -8% after reporting Q2 adjusted EPS of 41 cents, weaker than the consensus of 49 cents, and said it sees challenges from tariffs and volatile coffee prices.
Werner Enterprises (WERN) closed down more than -10% after Evercore ISI downgraded the stock to underperform from in line with a price target of $21.
Norwegian Cruise Line Holdings (NCLH) closed down more than -7% after saying it saw 'softening' in its 12-month forward bookings.
AppLovin (APP) closed down more than -6% after Edgewater Research said, 'Mobile gaming macro seems to be decelerating slowly,' and competition from both Meta Platforms and Alphabet is rising.
Earnings Reports (5/1/2025)
Air Products and Chemicals Inc (APD), Airbnb Inc (ABNB), Amazon.com Inc (AMZN), Ameren Corp (AEE), American International Group Inc (AIG), AMETEK Inc (AME), Amgen Inc (AMGN), Apple Inc (AAPL), Aptiv PLC (APTV), Arthur J Gallagher & Co (AJG), Baxter International Inc (BAX), Becton Dickinson & Co (BDX), Biogen Inc (BIIB), Broadridge Financial Solutions (BR), Builders FirstSource Inc (BLDR), Camden Property Trust (CPT), Cardinal Health Inc (CAH), Carrier Global Corp (CARR), Church & Dwight Co Inc (CHD), Consolidated Edison Inc (ED), CVS Health Corp (CVS), Dexcom Inc (DXCM), Dominion Energy Inc (D), DTE Energy Co (DTE), Eli Lilly & Co (LLY), EOG Resources Inc (EOG), Estee Lauder Cos Inc/The (EL), Eversource Energy (ES), Exelon Corp (EXC), Fortive Corp (FTV), GoDaddy Inc (GDDY), Hershey Co/The (HSY), Hologic Inc (HOLX), Howmet Aerospace Inc (HWM), Hubbell Inc (HUBB), Huntington Ingalls Industries (HII), IDEX Corp (IEX), IDEXX Laboratories Inc (IDXX), Ingersoll Rand Inc (IR), Intercontinental Exchange Inc (ICE), Iron Mountain Inc (IRM), Juniper Networks Inc (JNPR), Kellanova (K), Kimco Realty Corp (KIM), KKR & Co Inc (KKR), Linde PLC (LIN), Live Nation Entertainment Inc (LYV), Mastercard Inc (MA), McDonald's Corp (MCD), Mettler-Toledo International Inc (MTD), Moderna Inc (MRNA), Mohawk Industries Inc (MHK), Monolithic Power Systems Inc (MPWR), Motorola Solutions Inc (MSI), Parker-Hannifin Corp (PH), Pinnacle West Capital Corp (PNW), Quanta Services Inc (PWR), Smurfit WestRock PLC (SW), Southern Co/The (SO), Stryker Corp (SYK), Targa Resources Corp (TRGP), WW Grainger Inc (GWW).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
3 hours ago
- Globe and Mail
Is Palantir Still a Buy After Its Run-Up? 3 Analysts From The Motley Fool Weigh In.
One of the fastest-growing stocks in artificial intelligence (AI) over the last year is Palantir Technologies (NASDAQ: PLTR). Its Artificial Intelligence Platform (AIP) brought eye-popping productivity gains to its customers. Investors took notice, as the stock is up by 420% over the last year. Unfortunately for investors who have recently taken an interest, its forward P/E ratio is 205, and it sells for 96 times sales. Knowing that, three analysts from The Motley Fool have weighed in to determine whether its stock is still worth buying at these levels. Is Palantir a repeat lesson from the dot-com era? Justin Pope: Separating noise from signal is arguably the most challenging aspect of investing. For Palantir, the noise is a red-hot stock price. Shares of Palantir have risen a mind-melting 1,770% since 2023. In other words, buying the stock up to this point has looked like a genius move. Anyone seeing this, especially on social media, where people aren't always humble, might feel tempted to jump into the stock. But here is the signal. The stock is rising faster than Palantir's underlying business has grown. Don't get me wrong, I think Palantir is an excellent AI stock, and the company is executing at a high level, particularly since launching AIP two years ago. It can make a stock appear invincible when prices only go up. However, investors have seen this movie before. Cisco Systems ran to wildly excessive valuations during the infamous dot-com bubble in the late 1990s. It lost most of its value when the bubble burst, and still hasn't revisited its all-time high, a whopping 25 years later. That doesn't mean that Palantir will suffer the same fate, but check this out. Cisco's P/E ratio peaked at approximately 234, and its price-to-sales (P/S) ratio peaked at around 39. Palantir is even more expensive today than Cisco at its peak. CSCO data by YCharts At the very least, it's hard to imagine much more rational upside in Palantir from these levels. Even worse, any market downturn or misfire in Palantir's business could pop that valuation bubble. Investors should tread very carefully around Palantir stock these days. Amazon's stock history holds a valuable lesson for those worried about Palantir's lofty valuation Jake Lerch: Here's a sentiment that I often hear: "I love the stock, but it's too late to buy it now." And while there's nothing wrong with this viewpoint in theory, I've seen it disproven too many times in practice to grant it much weight. Take Amazon, for example. For years, countless analysts pointed out -- for good reason -- that Amazon's valuation was sky-high. From 1997 through 2000, Amazon's average P/S ratio was around 16. Moreover, the company had no profits -- and therefore no P/E ratio -- until 2003. Once it was making money, Amazon's average P/E ratio over its first five years of profitability was an eye-popping 88. Yet, investors who bought Amazon -- and held until today -- would be very happy with the results. In fact, $10,000 invested in the stock in 2008 would be worth about $800,000 today. This is all to point out that valuation isn't everything. Yes, Palantir is an expensive stock by just about any measure. Its current P/S and P/E ratios are significantly higher than the historical averages I cited for Amazon. However, that's because Palantir is poised to deliver enormous growth over the next decade or more. The company offers a unique value proposition that appeals to almost every organization. It can deliver efficiency gains for government agencies;it can cut costs for commercial clients. It can even help military and intelligence agencies win wars and prevent terrorist attacks. Simply put, there's very little this company can't do. Lastly, the nature of AI and data analysis means that Palantir is positioned to benefit from significant network effects and economies of scale as its AI systems improve and the company's overall client list grows. On top of that, its revenue is already growing at a year-over-year rate of 39%, andprofits are increasing, as is free cash flow. That's what gives me confidence to believe it's not too late to buy Palantir stock. Palantir is a winner for customers, but not investors Will Healy: When it comes to AI living up to its potential, perhaps no stock outshines Palantir. The company began in 2003 and utilizes AI and machine learning as a national security-focused tool. However, it was only when Palantir began to benefit from AIP's massive productivity gains that its popularity took off. Anduril Industries had a 200-fold efficiency gain in its ability to respond to supply shortages. A global insurer reduced an underwriting workflow from two weeks to three hours. With results like that, it is little wonder its commercial customer count is up fivefold over the past three years. Such gains undoubtedly played a role in the aforementioned stock price growth, but regrettably for Palantir bulls, the increases likely do not justify the software-as-a-service (SaaS) stock 's valuation, and here's why. In Q1, revenue of $884 million rose 39% compared to year-ago levels. With that growth, its net income of $214 million surged 103% higher over the same period. Unfortunately, triple-digit growth is not sustainable for even the best of companies, and the current valuation likely prices it for perfection. That "perfection" is likely not in the cards for Palantir. Analysts forecast revenue growth will slow to 36% for 2025 before falling to 29% in 2026. That is likely to do little to make the 96 P/S ratio more attractive, particularly when the larger and faster-growing Nvidia sells for 24 times sales. Indeed, Palantir is likely to play a key role in the AI field for years to come. Nonetheless, valuation matters at some point, and investors could find themselves stuck in a losing stock for years to come if the sentiment around the stock starts to turn negative. 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to171%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 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Amazon and Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Cisco Systems, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
Globe and Mail
3 hours ago
- Globe and Mail
3 Top AI Stocks to Buy in June 2025
The U.S. equity market made a strong recovery in May 2025, fueled by robust earnings, decreasing trade tensions, and rising investor confidence in the U.S. economy -- a significant improvement compared to the market's performance in April 2025. Now, Deutsche Bank analysts have raised the target for the benchmark S&P 500 index from 6,150 to 6,550 by the end of 2025. Given this renewed market optimism, artificial intelligence (AI) stocks are poised to be key beneficiaries of the next wave of capital inflows. Long-term investors can benefit from this trend by investing in these high-quality, artificial intelligence (AI)-powered companies that offer significant growth potential in the evolving market landscape. June is a good time to take a closer look at these three top AI stocks. 1. Nvidia Nvidia (NASDAQ: NVDA) has reported stellar results for the first quarter of fiscal 2026 (ended April 27, 2025). The company reported revenue of $44.1 billion, representing a 69% year-over-year increase. Nvidia also generated a solid $26 billion in free cash flow. Nvidia currently accounts for nearly 80% of the AI accelerator market. While a dominant presence in AI training workloads, the company is also focused on inference (real-time deployment of pre-trained models) workloads. The company is at the forefront of handling reasoning workloads (computationally intense and complex inference workloads) with its Blackwell architecture systems. Major cloud providers are already deploying these chips at a massive scale -- almost 72,000 GPUs weekly -- and plan to ramp up even more in the coming quarter. Hence, Blackwell is powering the next phase of AI where technology is thinking longer, solving problems, and giving better answers than just responding with pre-written answers. Besides hardware leadership, Nvidia's robust software ecosystem has ensured developer lock-in and a sticky customer base. With the CUDA parallel programming platform, TensorRT for deployment, and NIM microservices for inference, clients find it extremely costly and time-consuming to switch to competitors. The company has also built a healthy networking business, with this segment's revenue growing 64% quarter over quarter to $5 billion in the first quarter. Thanks to the technological superiority of its comprehensive ecosystem, Nvidia managed to provide a healthy outlook for fiscal 2026's Q2, despite its revenue being negatively affected by nearly $8 billion due to export restrictions for the Chinese market. Nvidia stock trades at 31.8 times forward earnings, which is not a particularly cheap valuation. But considering its growth trajectory and competitive advantages, Nvidia is a smart AI pick now, even at elevated valuation levels. 2. Broadcom Broadcom (NASDAQ: AVGO) has emerged as a prominent AI infrastructure player in 2025. The company's custom AI chips and networking solutions are being increasingly used by three prominent hyperscaler clients -- rumored to be Alphabet, Meta Platforms, and Chinese company ByteDance -- to optimize the execution of their specific workloads. CEO Hock Tan expects the three hyperscalers to generate a serviceable addressable market (SAM) of $60 billion to $90 billion in fiscal 2027. Additionally, the company is engaging with four additional hyperscalers to develop custom chips, underscoring the even larger market potential. Beyond custom chips, Broadcom is building the critical networking infrastructure that enables the training and deployment of large and powerful frontier AI models. The company's recent $69 billion acquisition of VMware positioned it as a key player in the enterprise software and hybrid cloud infrastructure space. With VMware's cloud orchestration and virtualization technologies, Broadcom can offer full-stack AI infrastructure solutions to its clients. Broadcom stock currently trades at 37.8 times forward earnings. However, considering its critical role in building global AI infrastructure, the company is an excellent pick, despite the rich valuation. 3. CoreWeave Previously a cryptocurrency mining operator, CoreWeave (NASDAQ: CRWV) has now positioned itself as a prominent "AI Hyperscaler." Unlike traditional hyperscalers such as Amazon 's AWS, Microsoft 's Azure, or Alphabet's Google Cloud Platform, which are primarily designed for general-purpose applications, CoreWeave's cloud infrastructure has been specifically designed for AI and machine-learning workloads. The company has established an extensive network of 33 purpose-built AI data centers across the United States and Europe. Solid demand for CoreWeave's specialized AI-first cloud infrastructure is directly driving its exceptional financial performance. The company reported $982 million in revenue in the first quarter of fiscal 2025, up 420% year over year. At the same time, the company's adjusted operating income rose 550% year over year to $163 million. This highlights that the company is on its way to becoming profitable, despite the high level of capital expenditures typical in the AI data center business. The company had a massive $25.9 billion revenue backlog from multi-year contracts at end of the first quarter. CoreWeave's strategic partnership with Nvidia is proving to be a significant competitive advantage. The deep relationship has given the company preferential access to Nvidia's cutting-edge GPUs and advanced networking technologies. With Nvidia having more than a $2.5 billion equity stake in CoreWeave (at current prices), the latter is practically assured of continued access to next-generation GPUs in the coming years. CoreWeave stock currently trades at 37.5 times sales, which seems quite rich. However, the elevated valuation is justified considering the company's huge addressable market, robust contract backlog, and impressive financial performance, making it a buy now. 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 Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to171%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 2, 2025 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. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom 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.
Globe and Mail
5 hours ago
- Globe and Mail
The 3 Best Growth Stocks to Buy With $100 Right Now
Growth stocks have been some of the best-performing investments over the last few years, but 2025 brought some challenges for growth investors. The increased volatility from growing global trade tensions and economic uncertainty hasn't been kind. Nonetheless, the S&P 500 Growth index has managed to eke out some outperformance of the S&P 500 index over the last month or so. With more downside from factors like tariffs priced into many growth stocks now compared to the beginning of the year, there could be room for them to continue outperforming through the rest of the year and beyond. Still, investors should remain mindful to be sure they're getting good value for the price they're paying. You can still overpay for a great growth stock. 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 » Importantly, you don't need a lot of money to get started with investing. Even if you have just $100 available to invest, you can buy shares in any of the following three great growth stocks that could outperform over the coming years. 1. Marvell Technology Marvell Technology (NASDAQ: MRVL) is a chip designer that's been a big beneficiary of the growth in artificial intelligence spending. There are two primary areas where Marvell's business benefits from the strong growth in generative AI infrastructure: its custom AI accelerators and its networking chips. Marvell is the company behind Amazon 's Trainium 2 custom AI accelerator, and it recently won Amazon's Inferentia order to make its custom AI inference chips. It also works with the three other hyperscalers (Microsoft, Alphabet, and Meta Platforms) for various data center chip designs, including Microsoft's Maia AI accelerator. Marvell's stock has been beaten down over concerns about hyperscalers working with other chip designers, like AIchip. However, management reported that it secured deals wth both Amazon and Microsoft to design their next-generation AI accelerators during the company's first-quarter earnings call. That said, given the demand for custom silicon, it's not unreasonable to see one or both of them use a secondary source to supplement Marvell. Marvell also makes networking chips, and it holds a particular advantage in optical modules that transfer data using light. Marvell's chips enable servers to communicate data with each other faster, increasing the efficiency of each cluster's performance. As data centers and clusters grow bigger and bigger, demand for Marvell's networking chips stands to grow considerably. Marvell stock trades for around $65 per share as of this writing. That gives it a forward P/E of just 23, which is an exceptional value considering the growth prospects ahead of it. While the growing reliance on a few select customers makes the company risky, it looks secure in its ability to hold onto those customers and grow its business. And given the price, there's less downside to the stock than just a few months ago when it traded at more than twice the price. 2. Block Block (NYSE: XYZ) is the company behind Cash App and Square. It disappointed investors recently due to a shortfall in Cash App's gross profit growth in the first quarter. But the recent sell-off could be a great opportunity for growth investors. Cash App aims to increase revenue per user through growing spend on the Cash Card (where it collects interchange fees) and expanding the number of services its users engage with in the app. The more services a user takes, the more likely they are to stick with the app. Its most recent service is Cash App Borrow, which gives users small, short-duration loans. The new product could help address the core issue leading to disappointing results for Cash App last quarter: a slowdown in spending. That result speaks to the more vulnerable nature of Cash App's core users. In an economic slowdown, Cash App users may be the first to cut back on spending. Major credit card networks notably didn't see a slowdown last quarter. The Square side of the business remains a leader in onboarding small businesses. It's focused on several core verticals, including restaurants, beauty, and services businesses. That's enabled it to build out a core software stack that makes it easy for small businesses to get up and running on its platform and start transacting. That's produced predictable growth and return on customer acquisition spending as it continues to grow its share of the microbusiness market while working to move upstream to bigger businesses. Block's current share price of around $63 is just 16.5 times analysts' estimates for 2026 earnings. While Block is expected to see an earnings dip this year, it should quickly recover in 2026, surpassing 2024 earnings. While short-term economic uncertainty has weighed on the stock (as it should), the long-term outlook remains strong thanks to its growing ecosystem and the network effect driving customer growth and retention. 3. DraftKings DraftKings (NASDAQ: DKNG) is one of the largest sports betting companies in North America. The company successfully leveraged its brand in Daily Fantasy Sports to rapidly expand into sports betting after a Supreme Court ruling legalized it in 2018. That brand strength gives it a significant advantage in the sports betting market. That's seen in its ability to attract about 400,000 new monthly unique payers to its platform over the past year despite increased competition from well-known brands like ESPN and Fanatics. But the growing popularity of DraftKings creates a second advantage for the business: more and better user data. Data is an extremely valuable asset in sports betting. Better data means more accurate and up-to-date money lines, more personalized and effective promotions, and faster expansion into new bet types, like in-game parlays. It can also help identify sharp bettors and mitigate the losses the sportsbook makes, and identify acquisition opportunities like DraftKing's recent Jackpocket purchase. DraftKings faces potential headwinds from lawmakers and regulators. Illinois recently passed a new tax law requiring sportsbooks to pay $0.25 per bet for the first 20 million bets and $0.50 per bet thereafter. DraftKings may be better positioned to absorb taxes like that than smaller sportsbooks with less regional coverage. DraftKings can shift its marketing focus to friendlier states where it can generate better profit margins. DraftKings did lower its revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) expectations alongside its first-quarter earnings report. Still, at just $34 per share, the stock trades for an enterprise value -to-forward-EBITDA ratio of about 21 based on management's outlook for 2025. Management's long-term outlook calls for an average EBITDA growth of 35% for 2026 through 2028 based on its 2025 outlook. That makes the current price a great value for growth investors. Should you invest $1,000 in Marvell Technology right now? Before you buy stock in Marvell Technology, 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 Marvell Technology 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 $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor 's total average return is792% — a market-crushing outperformance compared to171%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 2, 2025 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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Levy has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Block, Meta Platforms, and Microsoft. The Motley Fool recommends Marvell Technology 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.
