As the AI megatrend continues to accelerate, the Magnificent 8 (plus 2) continues to widen its lead (some more than others) and will thereby continue to benefit. Just this past week, for example, OpenAI unveiled "Sora 2," an advanced video generation model and a creation-first social feed (with API and Android integration planned). Also, Anthropic's "Claude Sonnet 4.5" (their most intelligent model yet) is now generally available on Google Vertex AI (enabling developers to build sophisticated applications). This all spells "more growth" and more need for chips, data centers and energy-efficient solutions. In a nutshell, more upside for AI ahead.
Top 10 Quantum Stocks (Big Disruptive Potential)
Quantum computing (which uses qubits to perform complex calculations much faster than today's systems) has the potential to transform the world, but is still many years away from widespread commercial use. The industry is valued at $3.5B, but could hit $20.2B by 2030 (41.8% CAGR) as per a McKinsey study. As such, the stocks have massive upside, but also huge volatility risks; and investors may want to pick entry points discriminately at this nascent point. The group is coming off extreme momentum, and opportunities to add a few shares (to a more broadly-diversified, goal-focused portfolio) may become increasingly compelling. This is a high-risk, potentially very-high-reward space. Here are 10 stocks worth considering.
Google: Despite Big Risks, It’s a Great Time to Be Alphabet
Google is a great business (thanks to ad revenue from search dominance, growing cloud and AI megatrends, and other big bets like driverless Waymo), and its new earnings release crushed expectations and demonstrated extreme financial strength, despite growing big risks (such as antitrust pressures, concentrated revenue from search ads and scary-massive capital expenditure plans). I review the details, and conclude with my opinion on investing.
4 Good Stocks
With the turn of every new year, stock market pundits love to look at what performed best and worst last year, as if that magically gives them some hidden wisdom about what will perform the best in the year ahead. And while momentum and contrarian investment philosophies may both have some merit, a better bet is always to invest in businesses that are fundamentally promising in the years ahead, and also trading at reasonable valuations. In the report, we take a closer look at “4 Good Stocks,” all of which appear extremely promising in the year (and years) ahead, assuming of course you are a patient investor looking to make a lot of money.
Quick Note: Alphabet Earnings
Amazon: Ranking "The Magnificent 7" (Midyear Update)
As you can see in the table below, “The Magnificent 7” mega-cap stocks have posted incredible 10-year returns. However, there have recently been some big changes in the market (e.g. interest rate expectations) and to these seven businesses in particular (e.g. maturation, dividends, AI and more). In this report, we provide an update to our January rankings of the Magnificent 7 stocks, with a special focus on Amazon (AMZN) (including its business, four big growth drivers, valuation and risks). We conclude with our strong opinion on investing in Amazon (and each of the Magnificent 7) for the remainder of this year (and beyond).
Alphabet, Big Risks: Bing AI, Apple DOJ, Meta-Like Spending
Alphabet (GOOGL) shares are up a measly 7.9% this year, and up 10.8% over the last two-years. That may not sound too bad, but compared to other mega-caps like Microsoft (MSFT) (+14.2% ytd, +45.9% 2yr) and Meta Platforms (META) (+44.1% ytd +141.2% 2yr), Alphabet has been lackluster (and some investors worry it’s increasingly going the way of Apple (AAPL) (-10.4% ytd). In this report, we review Alphabet’s business, its big risks (e.g. AI threats, challenges from being enormous, high spending) and its current valuation. We conclude with our strong opinion on investing.
Google Earnings Note
Quick Note: Google released earnings after the close. Here are two quick observations: (1) Cloud is smaller than Amazon Web Services and Microsoft Azure, and a smaller part of Google's business, but still Growing Fast! (see table). (2) Google is Rapidly Accelerating spending on Artificial Intelligence (currently categorized in "Unallocated Corporate Costs") (see table 2).
Google Stock: Market Puking
Stalwart, blue-chip, US stock market juggernaut, and Google parent, Alphabet (GOOGL), made a new 52-week low this week. This is a company that has over 10% revenue growth, a seemingly insurmountable ecosystem and moat, and now trades at only 10 times forward EV to EBITDA. In this report, we review Google’s business model, revenue growth, capital allocation, current valuation and big risks. We conclude with our strong opinion on investing.