Shares of CoreWeave (NASDAQ: CRWV) are falling today, down 10.8% as of 1:06 p.m. ET. The drop comes as the S&P 500 and Nasdaq Composite have lost 1.3% and 1.5%, respectively.

The AI cloud computing company is seeing its stock slide as an acquisition deal critical to its continued growth appears to be on shaky ground.

CoreWeave’s Core Scientific deal looks in danger

Earlier this summer, as CoreWeave stock was peaking amid insatiable demand for AI data center capacity, the company struck a deal with Core Scientific to acquire the data center infrastructure company. The acquisition would greatly expand CoreWeave’s capacity and help it continue to scale rapidly.

The deal, however, was an all-stock deal — shareholders of Core Scientific would not receive cash, but CoreWeave shares worth US$9 billion. The stock has fallen nearly 50% from the time the deal was made, meaning the notional value of the contract is now worth about half of what it was. ​​Some prominent shareholders of Core Scientific have already publicly stated that they will oppose the deal unless the terms are renegotiated.

The threat that this deal might fall through or that CoreWeave might be forced to pay significantly more than shareholders expected has spooked investors.

CoreWeave looks mighty risky

This is undoubtedly a popular stock and one of the most visible companies at the forefront of data center building for AI, but AI cloud computing infrastructure is enormously expensive, and the company is relying on huge amounts of expensive financing to continue to try to meet its computational obligations. Regardless of the outcome of the Core Scientific deal, I would stay away from this stock.

The post Why CoreWeave Stock Is Plummeting Today appeared first on The Motley Fool Canada.

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Fool contributor Johnny Rice 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.

This article first appeared on our U.S. website.

Shares of Palantir (NASDAQ: PLTR) are falling once again. The stock is down about 2% as of 2 p.m. Wednesday after having dropped as much as 5% earlier in the day. Palantir stock gave up nearly 8% Tuesday and has been on a downslide since Aug. 12.

The AI-powered company is seeing its share slide as part of a larger sell-off in tech, as concerns over the health of the U.S. economy mount. Given its sky-high valuation, Palantir’s stock is getting hit especially hard.

Palantir stock plunges as tech sell-off intensifies

Among the companies that actually take artificial intelligence (AI) and apply it in the real world, Palantir has been a notable standout, delivering massive revenue and earnings growth while rivals like C3.ai and BigBear.ai are still operating deep in the red and seeing their sales stagnate.

That’s led investors to pile into Palantir stock, which has reached an astronomical valuation of nearly 500 times earnings. That’s not a particularly sustainable valuation, and as concerns mount after recent jobs data showed a slowing economy, many investors are rotating out of riskier tech stocks sitting near record highs.

Citron Research takes aim at Palantir’s valuation

Palantir was also the target of a short report from one of the most prominent short sellers on the market, Citron Research, which pointed out that after OpenAI’s latest funding round, it is valued at roughly 17 times its sales. Palantir’s stock carries a price-to-sales (P/S) multiple nearly seven times that of OpenAI — the company at the very heart of the AI boom. Citron believes this is not rational.

I agree. Palantir may be firing on all cylinders, but its stock is disconnected from reality, and until it comes back down to earth, I personally would not invest.

The post Why Palantir Stock Is Falling (Again) Today appeared first on The Motley Fool Canada.

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Fool contributor Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Palantir Technologies. The Motley Fool has a disclosure policy.

Shares of Meta Platforms (NASDAQ: META) were flying higher on Thursday. The stock gained 2% as of 12:15 p.m. ET but gained as much as 5.1% earlier in the day. The social media behemoth reported its fourth-quarter earnings Wednesday after the market closed.

The numbers

Meta delivered fantastic results for Q4 2024. The company increased earnings per share for the quarter by 50% year over year, reaching $8.02. The figure well exceeded Wall Street’s expectations of $6.76 per share. Sales for the company hit $48.4 billion, beating the expected $47 billion.

However, it wasn’t all roses. Meta’s VR play Reality Labs is still losing cash, operating at a loss of $5 billion. Guidance for Q1 2025 also disappointed; the midpoint of the company’s projected revenue comes in about $1 billion short of expectations.

Meta settles a key lawsuit

The stock also received a bump from the news that Meta has settled a lawsuit from President Trump. The Facebook parent agreed to pay just $25 million, a drop in the bucket for a company that nets more than 600 times that every quarter.

What’s next for Meta

Despite the recent DeepSeek news, the company didn’t alter course in its quest to build AI infrastructure at an incredible rate. Meta is expecting to spend more than $60 billion in 2025, up roughly 60% from 2024. Time will tell whether this spend will look bloated in retrospect, but in my opinion, any efficiency gains from DeepSeek’s technology will only lead to Meta’s AI products delivering more value and the bet will pay off.

The post Why Meta Stock Is Soaring Today appeared first on The Motley Fool Canada.

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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. Fool contributor Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Meta Platforms. The Motley Fool has a disclosure policy.

What do you think is the most trusted institution in the United States? The military? The Supreme Court? Those may have been the answer at some point in the not-too-recent past. Today, however, that title belongs to Amazon (NASDAQ: AMZN). The online retail and technology giant garners more trust than any other single institution in America. That is one strong brand presence.

I’d be willing to bet that an Amazon truck drove down your street at some point today. That upturned arrow is plastered on brown boxes sitting on millions of porches across the country. Amazon is everywhere. Rather than saturating the airwaves with commercials, the company saturates our physical world.

This ubiquity is an important component of its trusted position, but it isn’t enough on its own. Even more essential is that Amazon delivers — pun intended — on its promises. You can order almost anything you can think of from Amazon and it will arrive as advertised in the time you expect. It executes at an extremely high level on a scale that boggles the mind. Last year, Amazon delivered 4 billion packages in the U.S. no later than the next day.

Its business has grown far beyond e-commerce, however, and is continuing to forge new paths. Let’s consider what the next few years could hold.

Amazon is determined to lead the era of AI

It’s no secret that there is an arms race in Silicon Valley. The big players are pouring billions into artificial intelligence (AI) infrastructure and research, hoping to stay ahead of the competition. It’s a field in which falling behind is not an option despite the enormous costs involved. As Alphabet CEO Sundar Pichai put it in the company’s latest earnings call, “the risk of underinvesting is dramatically greater than the risk of overinvesting.”

Amazon is on the same page. Major investments are happening companywide, but nowhere is the impact more acutely felt than in its subsidiary, Amazon Web Services (AWS). The “hyperscaler” — that is, builder and operator of big data centers that power the cloud — was already the leading cloud provider before the current AI race kicked off. It’s been upgrading and expanding its infrastructure to match the demands of AI and rolling out products aimed at bringing users — especially enterprise customers — on board. It’s paying off. AWS grew its Q1 2024 and Q2 2024 sales year over year by 17% and 19%, respectively.

It won’t be an easy road, however, as Amazon faces stiff competition

Despite the sales growth, it isn’t going as smoothly as many would like, including Amazon’s founder, Jeff Bezos. It was reported recently that the former CEO has been reaching out to Amazon leadership, asking why more AI firms aren’t choosing AWS. Its hold on the market appears to be slipping.

Microsoft‘s Azure has been gaining market share, while AWS is losing it. From Q1 2023 to Q1 2024, Azure went from 23% of the market to 25%, while AWS dropped from 32% to 31%. Perhaps to try to stem the tide, the AWS CEO was replaced in May. Fortunately for Amazon, the leadership change looks to be working out. The second quarter of this year saw the trend reverse, with AWS clawing back a percentage point from Azure.

Despite the struggles, Amazon is headed in the right direction

Amazon still has a long way to go and will have to continue to defend its market position, but the future looks bright for AWS. The market as a whole is going to grow rapidly as AI continues to mature. So, if AWS trades a percentage or two of market share, it shouldn’t be a big issue. Furthermore, Microsoft had a bit of a head start, given its partnership with OpenAI, the maker of ChatGPT. I think that edge will diminish as new players emerge and challenge OpenAI’s leadership.

Amazon’s ultimate aim here is to be the bedrock on which AI is built. It sees itself as the enabler of AI, and its priority is not necessarily building the most influential AI products itself — although, to be sure, it’s investing here too, not the least of which was its $4 billion purchase of the OpenAI rival Anthropic — but providing the tools to build and infrastructure to run AI. As CEO Andy Jassy put it in his 2023 letter to shareholders, “These AWS services… will empower internal and external builders to transform virtually every customer experience that we know (and invent altogether new ones as well). We’re optimistic that much of this world-changing AI will be built on top of AWS.”

I think Amazon is in a great position to do just that, and five years’ time is enough for AI to really take off. This is on top of continued success from its core retail business and rapid expansion of its advertising segment. Now, Amazon does command a premium compared to some of its tech peers. Its price-to-earnings ratio (P/E) is fairly high at 43.

However, that is actually a bit lower than where it’s historically traded, so I’m comfortable with this. For these reasons and more, I believe Amazon’s stock will outperform the market over the next five years.

The post Where Will Amazon Stock Be in 5 Years? appeared first on The Motley Fool Canada.

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Suzanne Frey, an executive at Alphabet, 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. Fool contributor Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy.

This year sure has been a wild ride for tech investors. Through July 10, the Nasdaq Composite was up more than 26%. Driven by the investing world’s love affair with artificial intelligence (AI), stocks in the space saw absolutely monster returns. The poster child, Nvidia, returned a whopping 180% in the same time frame.

Nvidia is a semiconductor company, meaning it’s involved in the creation of computer chips. The hyper-advanced versions that Nvidia designs are the lynchpin of the AI industry; without them AI as we know it would not be possible. That is why it, and other semiconductor companies, are so valuable.

The market has since cooled off as investors weigh current valuations and the possibility of a not-so-soft landing the economy may be in for in the near future. Despite this, the promise of AI remains. If you believe in its long-term thesis, now may be a perfect time to invest as stocks are discounted from their peak just a month ago.

But where to put, say, $1,000? Instead of picking and choosing individual stocks — perfectly valid if done judiciously — you could opt for an exchange-traded fund (ETF). These are bought and sold in the same way you would an individual stock. However, owning it provides exposure to a basket of companies at once. It’s a great way to quickly and simply diversify your holdings. There are all kinds of ETFs, but thematic ETFs are some of the more interesting ones, focusing on a specific sector or area of the market, like semiconductors. Let’s take a look at my favorite semiconductor ETF and one alternative.

This is the top-performing semiconductor ETF this year and my top pick

The best performer this year by a pretty wide margin is also the biggest semiconductor ETF, the VanEck Semiconductor ETF (NASDAQ: SMH). The ETF has returned 40% this year so far. Much of this success comes from the ETF’s heavy weighting toward Nvidia. More than 20% of the ETF is invested in the company. This chart shows the top five holdings; notice the steep drop-off from No. 2 to No. 3.

Now, this has to do with the methodology of how VanEck chooses to invest its funds, or rather, the methodology of the index that the ETF is designed to track. The fund is passively managed, which means there is not a fund manager actively trading assets at their own discretion. Instead, it mimics a specific index, in this case the MVIS US Listed Semiconductor 25 Index (MVSMH), which tracks the 25 largest semiconductor companies that generate at least half of their revenue from semiconductors or semiconductor equipment.This index has proven a winner for VanEck. Take a look at its returns over the last three years compared to two major competitors.

SMH data by YCharts

The ETF has consistently outperformed its rivals. Now, there is a management fee — that is true of all ETFs — but it’s on the low end at just 0.35%, or $35 annually per $10,000 invested. That’s pretty cheap for ETFs. The main issue I have with this ETF is its concentration. It is heavily weighted to just a handful of companies. This is part of why it returned more than some of its competitors, but it also poses more risk.

There are some options, like the iShares Semiconductor ETF, that provide slightly more diversification. iShares’ offering invests in about 10 more companies and the weighting is less concentrated at the top. Of course, this is only marginally less concentrated. These are highly targeted ETFs, after all. These are meant to be held as a part of a wide-reaching and diverse portfolio.

The post The Best Semiconductor ETF to Invest $1,000 in Right Now appeared first on The Motley Fool Canada.

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Fool contributor Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Advanced Micro Devices, Nvidia, Taiwan Semiconductor Manufacturing, and Texas Instruments. The Motley Fool has a disclosure policy.

Stock splits are all the rage this summer with several high-profile companies choosing to execute the move. Nvidia probably attracted the most attention as it was the hottest stock on the market well before its split, but other big names like Chipotle and Broadcom joined in on the fun.

Why? Stock splits, in this case forward stock splits, happen when a company’s share price gets to a level that makes it difficult for a significant portion of the market to buy in. In other words, it’s too expensive for the average Joe. The company issues stockholders more stock and proportionally reduces the price at which each share trades.

So in the end, you have more shares, but the total value of all your investments hasn’t changed because the shares cost less. However, even though the value in theory doesn’t change, more often than not a forward split is followed by positive movement in the stock price. They tend to be good news for investors.

So who might be next? Well, it’s impossible to know for sure, but there’s one artificial intelligence (AI) company that I think could split its stock sooner rather than later.

Meta is riding high on huge earnings after delivering big time

A far cry from its beginnings as “The Facebook,” Meta Platforms (NASDAQ: META) evolved dramatically over the years into the global social media powerhouse it is today. With 3.27 billion daily active users, Meta is ingrained in the lives of a significant portion of the world.

The company just released monster earnings for Q2 2024, beating Wall Street’s already healthy expectations. The company posted 22% year-over-year growth in revenue and a whopping 73% jump in earnings per share.

Lots of different factors went into it. The company is much leaner these days, following layoffs in the last year that reduced the headcount and overhead. Revenue growth, though, comes from the continued growth of Meta’s user base and the frequency and price of its ads. Meta’s entire bottom line is driven by advertising, at least at this point. CEO Mark Zuckerberg is continuing to double down on his metaverse play — we’ll see how that plays out. The company served 10% more ads while charging 10% more for the service.

Advertisers love Meta’s apps because people who use them are extremely engaged. Furthermore, Meta began incorporating AI into its algorithms, serving ads in an even more effective manner and serving more targeted content to users who keep them using the apps.

Meta’s stock looks ripe for a split

When the earnings were released, the company’s stock jumped nearly 5% the next day and another 8% since. Now around $530 a share, it is the most expensive stock by price in the “Magnificent Seven.” It is also the only one that has yet to split its stock.

There is no set price at which companies decide to pull the trigger. Nvidia’s stock was trading around $1,200 when it split; Alphabet‘s was trading around $2,700. Some companies do it at a much lower price, though. The last time Apple split its stock it was trading just shy of $500. Meta’s current $530 is more than enough to justify a split and considering the move’s popularity as of late, I think there is a solid chance it could happen in the near future.

Stock splits are not a reason to buy a stock, however. Meta’s fundamentals make it a stock that you should have in your portfolio. It is delivering where it needs to consistently while investing money into the future. And even if Zuckerberg’s vision for the metaverse doesn’t pan out, the company is still in a strong position to succeed.

The post Is This Unstoppable AI Stock The Next Big Stock Split? appeared first on The Motley Fool Canada.

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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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Fool contributor Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Alphabet, Apple, Chipotle Mexican Grill, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.