The artificial intelligence chipmaker Nvidia (NASDAQ: NVDA) has amassed close to a $3.2 trillion market cap, making it one of the world’s largest chipmakers. It now consumes more than 6% of the broader benchmark S&P 500 index. Over the last five years, Nvidia has grown annual revenue by 458% and the stock is up an incredible 2,009%. Given the potential for AI to disrupt life as we know it, it’s understandable that investors are so excited about the stock.

But the lure of these kinds of gains is naturally going to attract competition. Now, one of Nvidia’s competitors is planning an initial public offering (IPO) and claiming to manufacture chips that can vastly outperform Nvidia at a fraction of the price. Let’s take a look.

20x better than Nvidia?

Last week, the AI chipmaker Cerebras filed its registration statement with the Securities and Exchange Commission (SEC) with the intent to go public. In a press release from 2021, Cerebras said it had a valuation of $4 billion after a $250 million series F financing round. The company is targeting a $1 billion IPO at a $7 billion to $8 billion valuation.

In its registration statement, Cerebras cites Nvidia as a competitor, as well as other large AI companies such as Advanced Micro Devices, Intel, Microsoft, and Alphabet. Here is a description of what Cerebras does:

Cerebras’ pitch is that bigger is better. That’s because the company has designed a chip that is the size of a full silicon wafer, and the largest ever sold. The company believes that the size advantage leads to less time moving data. Furthermore, Cerebras has a flexible business model in which clients can buy Cerebras products to have at their facilities or through a consumption-based subscription through the company’s cloud infrastructure.

Cerebras clearly wants investors to compare, or at least associate, the company with Nvidia. Nvidia is mentioned 12 times in the registration statement. Cerebras also provides a side-by-side comparison of its Wafer-Scale Engine-3 chip versus Nvidia’s H100 graphics processing unit (GPU), which is considered the most powerful GPU on the market.

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Cerebras CEO Andrew Feldman publicly said the company’s inference offering is 20 times faster than Nvidia’s at a fraction of the price. In 2023, Cerebras generated about $78.7 million of revenue, up 220% year over year. Through the first half of 2024, Cerebras has grown revenue to $136.4 million. The company still hasn’t earned a profit, having reported a nearly $67 million loss through the first half of 2024. These numbers also pale in comparison to Nvidia, which recently reported second-quarter revenue of $30 billion and a profit of roughly $16.6 billion.

Will Cerebras make a splash?

With big publicity from news publications and claims of being 20 times faster than Nvidia, I think it’s safe to say that Cerebras already has and will continue to make a splash.

Depending on the excitement investment bankers can drum up during the company’s road show and market conditions, I wouldn’t be surprised to see Cerebras go public at a higher valuation than expected. AI has been all the buzz and the IPO market has been flat for a few years now, so there could be pent-up demand on Wall Street.

Will Cerebras overtake Nvidia? Only time will tell. Its product offerings are impressive, but it still has a ways to go to get its financial profile in line with Nvidia. Furthermore, there may be some advantages to Nvidia having smaller chips and it remains to be seen whether Cerebras can compete with Nvidia’s software language CUDA — although the company does say that its software program “eliminates the need for low-level programming in CUDA.”

While everything sounds great, there is likely still a “show me” component to this story. After all, the bulk of Cerebras’ revenue comes from one customer. Nvidia also has a leading market share in the AI chip space and relationships with many large clients. Who’s to say Nvidia couldn’t use its size — and likely resource — advantage to develop a similar large wafer chip? There’s a lot left to play out, but this could be one of the more interesting developments for market watchers to pay attention to.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,266!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,047!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $389,794!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.

The Newest Artificial Intelligence Stock Has Arrived — and It Claims to Make Chips That Are 20x Faster Than Nvidia was originally published by The Motley Fool

On some levels, Advanced Micro Devices (NASDAQ: AMD) looks increasingly like a competitor to Nvidia in the artificial intelligence (AI) accelerator market. While almost everyone perceives Nvidia as the dominant player in this market, AMD raised some eyebrows by winning a contract from Oracle.

Still, for all these accolades, AMD is barely profitable, and its revenue growth rate remains mired in the single digits. Also, despite the Oracle contract, AMD is not yet in Nvidia’s league regarding AI accelerators.

Nonetheless, one AMD metric has shown a dramatic improvement. As that figure continues to grow, the semiconductor stock could take its place as a full-fledged Nvidia competitor in the AI accelerator market.

Where investors should look

The important figure is not so much data center revenue as it is data center revenue as a percentage of total revenue. Here’s why: In the second quarter of 2024, AMD’s revenue of $5.8 billion grew by only 9% yearly. But this figure is deceiving. Gaming revenue dropped 59%, while embedded revenue fell 41%.

However, data center revenue, the segment designing AI accelerators, was up 115%! This is significant because Nvidia’s data center revenue was 88% of the company’s total in the latest quarter. Three years ago, it was not Nvidia’s largest revenue source. Now, the same pattern seems to have appeared in AMD’s financials.

In Q2, the data center was 49% of AMD’s revenue, up from only 25% one year ago. Assuming it is going to follow in Nvidia’s footsteps, AMD’s data center revenue appears on track to continue growing rapidly.

Furthermore, the chip industry is cyclical, meaning the gaming and embedded segments are unlikely to experience revenue declines comparable to the ones over the last year. Both factors should mean that AMD’s overall revenue — and, by extension, net income — are likely to experience dramatic surges, helping to draw more investors into AMD.

Ultimately, market leadership for AMD is unlikely anytime soon. However, as long as the data center segment continues to grow as a percentage of the company’s revenue, it should take its stock dramatically higher.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

Story continues

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,266!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,047!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $389,794!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

Will Healy has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Oracle. The Motley Fool has a disclosure policy.

Every AMD Stock Investor Should Keep an Eye on This Number was originally published by The Motley Fool

CRISPR Therapeutics (NASDAQ: CRSP) and Moderna (NASDAQ: MRNA) have much in common. They’re both innovative biotechs working in relatively newer niches of this booming industry.

However, they’ve moved in the wrong direction this year. CRISPR’s shares are down by 27% year to date, and Moderna’s are down by 41%. Regardless of their performances so far in 2024, both stocks are worth investing in this month. Read on to find out why.

1. CRISPR Therapeutics

CRISPR Therapeutics recently hit a breakthrough point when it earned approval for its first product, Casgevy, a therapy for sickle cell disease and transfusion-dependent beta-thalassemia. Casgevy is also the first medicine on the market that uses the famous CRISPR gene editing technique. Given this significant milestone, why is the company underperforming the market?

Here are two potential reasons. First, after Casgevy’s approval, some investors decided to take some profits. Second, it will take time before Casgevy contributes meaningfully to CRISPR Therapeutics’ financial results. Ex vivo gene editing medicines like Casgevy require that patients’ cells be collected and used to manufacture the treatment before it’s reinserted into them. The process takes a while and can only be done in qualified treatment centers.

Though it’s impossible to ignore these factors, investors may be undervaluing Casgevy’s prospects. CRISPR Therapeutics partnered with biotech giant Vertex Pharmaceuticals to develop and market it. As a result, the medicine earned approval in places a midcap biotech by itself may not have targeted: Saudi Arabia and Bahrain. These markets alone have some 23,000 eligible patients. The partners estimate an addressable market of 35,000 people in the U.S. and Europe.

Casgevy, at a price of $2.2 million in the U.S. — and very little competition to speak of, at least for now — could easily vastly exceed the $1 billion in sales milestone. Yes, it might take a little longer than it would if Casgevy were an oral pill, but patient investors should bide their time.

That’s why CRISPR Therapeutics is a great stock to buy this month. It hasn’t performed well this year, but over the long run, it has the tools to become a major player in the promising gene editing realm. Interested investors should scoop up the company’s shares while they’re down.

2. Moderna

Moderna made a name for itself during the pandemic by developing and marketing a successful COVID-19 vaccine. Although sales from this product have fallen off a cliff, the company has made plenty of progress.

Moderna is setting a solid foundation that could allow it to perform well over the long run. That starts with newer approvals: Moderna has now earned the green light for an RSV vaccine called mRESVIA and should launch at least one other product within the next couple of years.

The company’s combined coronavirus/flu vaccine aced a phase 3 study. It elicited higher immune responses than some individual vaccines in both categories in its late-stage trial.

Few people like getting shots, even if it’s necessary to do so. Getting one beats getting two, provided patients don’t have to sacrifice efficacy. It looks like that won’t be a problem.

Moderna has several other phase 3 candidates — a potential stand-alone flu vaccine, one for the cytomegalovirus (there currently is none), another for the norovirus, and still another that’s being developed as a personalized cancer vaccine in collaboration with Merck. Moderna should recover in time, even of its financial results currently don’t inspire confidence.

What does that mean for investors? The stock is down 41% year to date. There are several potential catalysts related to the company’s late-stage pipeline on the horizon that could jolt the stock price.

In the long run, Moderna’s vast pipeline of mRNA-based products should help it develop plenty of successful candidates. Now is a good time to buy.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,266!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,047!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $389,794!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics, Merck, and Vertex Pharmaceuticals. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.

2 Biotech Stocks That Are Screaming Buys This Month was originally published by The Motley Fool

The stock market recently hit another all-time high. The S&P 500 is up more than 30% over the past year, driven by a strong economy and falling interest rates. As a result, the valuations of most stocks have soared. The S&P 500 currently trades at more than 24 times earnings, which is much higher than the roughly 20 times P/E ratio it had at this time last year.

However, while the broader market is getting more expensive, there are some bargains if you know where to look. Several real estate investment trusts (REITs) are incredibly cheap right now because they haven’t yet captured the full benefits of falling interest rates. Realty Income (NYSE: O), W. P. Carey (NYSE: WPC), and EPR Properties (NYSE: EPR) stand out for their attractive values and high dividend yields right now.

This high-quality dividend stock is on sale

Realty Income is a diversified REIT that owns stable retail, industrial, and gaming properties net leased to high-quality tenants under long-term agreements. Those leases provide it with very stable rental income because the tenants cover all operating costs, including routine maintenance, building insurance, and real estate taxes. That gives it a lot of visibility into its earnings.

The REIT currently expects to generate between $4.15 and $4.21 per share of adjusted funds from operations (FFO) this year. With its share price recently over $60 apiece, Realty Income trades at about 15 times its adjusted FFO. That incredibly cheap valuation is why the REIT offers a high dividend yield. At more than 5%, it’s several times higher than the S&P 500’s sub-1.5% dividend yield.

Realty Income has done a fantastic job increasing its dividend over the years. It has raised its payout for 108 straight quarters and every year for three decades. The REIT routinely invests billions of dollars each year into buying new income-producing net lease real estate. Those investments should grow its adjusted FFO, enabling the company to steadily increase its dividend.

Building back better

W. P. Carey is also a diversified REIT. It owns industrial, retail, and other properties (including a portfolio of operated self-storage locations). It focuses on owning operationally critical commercial real estate net leased to high-quality tenants.

The REIT has been reshuffling its portfolio quite a bit over the past year. It made the strategic decision to exit the office sector late last year. Meanwhile, a large self-storage tenant exercised its option to purchase the properties it leased from the REIT. Those sales have weighed on the REIT’s dividend, FFO, and valuation.

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W. P. Carey expects to generate between $4.63 and $4.73 of adjusted FFO per share this year. With its stock price currently right around $60 a share, the REIT trades at less than 13 times its FFO. That incredibly cheap valuation is why it currently has a dividend yield approaching 6%. The company has already started rebuilding its portfolio and dividend, which should continue in the future.

A cheap ticket to lots of dividend income

EPR Properties is a REIT that owns experiential real estate like movie theaters, attractions, and entertainment venues. It leases those properties back to operating companies under long-term net lease agreements.

The REIT expects its experiential real estate portfolio to produce $4.76 to $4.96 of FFO as adjusted this year. With its share price below $50, the REIT trades at about 10 times its FFO. That ridiculously cheap level is why it offers a dividend yield above 7%.

EPR Properties generates enough income to cover its high-yielding dividend with ample room to spare. That gives it the financial flexibility to invest in building and buying more experiential properties. It plans to spend $200 million to $300 million this year. Those investments will help grow its FFO, which should enable the REIT to continue increasing its dividend.

Dirt cheap dividend stocks

Higher interest rates have weighed on REIT valuations over the past few years. While rates have started to fall, many REITs still trade at bargain-basement prices.

Realty Income, W. P. Carey, and EPR Properties are among the cheaper REITs, which is why they have such attractive dividend yields. Those high yields, along with their low valuations and improving growth prospects, position these dividend stocks to deliver strong total returns in the coming years, making them look like great buys right now.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,266!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,047!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $389,794!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

Matt DiLallo has positions in EPR Properties, Realty Income, and W.P. Carey. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.

3 Incredibly Cheap Dividend Stocks to Buy Now was originally published by The Motley Fool

The bull market has had a variable impact for stocks across a range of industries the last few years. While some companies have ridden the bull market waves, others have retreated or been beaten down by the market at large for one reason or another.

Even if you have a more modest amount to invest, say $200, there are still quality businesses begging to be bought in the current environment. Sometimes, these stocks are discounted as fickle investor sentiment prevails, but they can still be superior long-term buys. Here are two such names to consider for your portfolio.

1. Pfizer

Pfizer (NYSE: PFE) has definitely struggled in the last few years after its exceptional performance during the height of the COVID-19 pandemic as a result of its vaccine and oral antiviral drug. While the tailwinds from those products have long died down, there’s plenty to like about this business if you’re a long-term buy-and-hold investor. Pfizer remains one of the top healthcare companies in the world, with a portfolio of blockbuster as well as emerging vaccines, and medicines in disease areas including oncology, hematology, and immunology.

The company went on an acquisition streak with the billions in revenue and profits raked in from COVID-19 products. One notable acquisition was of cancer drugmaker Seagen for a cool $43 billion, a purchase that has been integral in management’s goal to have eight or more blockbuster oncology drugs in its portfolio by 2030. Pfizer intends to achieve this goal through a combination of new drugs and additional indications for existing ones. Management is also planning to double the number of patients being treated with its cancer drugs by that time frame, from its current figure of about 2.3 million lives.

The company’s oncology division will be focusing primarily on various breast cancers, genitourinary cancers, blood cancers, and thoracic cancers, areas where it already has approved drugs, but with varying levels of penetration. Management has previously said the Seagen acquisition alone could add $10 billion in additional annual revenue to Pfizer’s top line by 2030. Oncology drugs are just one part of Pfizer’s growth strategy, though.

The company has been aggressively cutting costs, and hopes to achieve $4 billion in net cost savings in 2024 alone. The company’s recent acquisitions have also brought new medicines like Nurtec, a migraine therapy developed by Biohaven Pharmaceuticals, which is now a part of Pfizer. Nurtec was first approved by the U.S. Food and Drug Administration in 2020, and became the first in a class of drugs known as calcitonin gene-related peptide (CGRP) receptor antagonists available in a fast-acting orally disintegrating tablet (ODT).

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Nurtec is estimated to have peak annual sales potential in the ballpark of $6 billion. It is racing toward that runway, delivering $213 million in revenue in 2022 and $928 million (just shy of the requirement to hit blockbuster status) in 2023. Current Pfizer blockbusters include blood thinner Eliquis, as well as the Vyndaqel family of drugs (used to treat cardiomyopathy of wild-type or hereditary transthyretin-mediated amyloidosis), and the Prevnar family of pneumococcal vaccines, which can be used to prevent pneumonia, meningitis, and sepsis.

In the most recent quarter, revenue grew 3% operationally even with waning COVID-19 product sales factored in. If you exclude these products, Pfizer’s top line grew 14% operationally, which is a pretty great growth rate when you’re looking at a business at this level of maturity and scale. Total revenue came to $13.3 billion, while profits totaled $42 million for the three-month period.

Pfizer is also a faithful dividend payer. Because investor appetite toward shares has dampened significantly, its dividend yield has risen to a juicy 5.8%. Income investors looking to invest in an established healthcare company and enjoy some dividend returns to boot can still find plenty of green flags for this business.

2. e.l.f Beauty

E.l.f Beauty (NYSE: ELF) has had a bumpy ride in recent months, with shares currently down about 25% since the start of the year. The cosmetics retailer is likely dealing with mixed investor sentiment due to a range of factors, including shifts in consumer spending patterns, uncertainty about the current macro environment that is trickling down to a numerous growth-oriented stocks, and how inflation could impact growth rates.

That being said, e.l.f. continues to do extremely well from a financial perspective. It regularly reports growth rates in the double digits, and even some of its more moderate projections for growth for the current fiscal year still targets a 25% to 27% revenue increase from the prior one.

E.l.f. beauty has garnered renewed interest from a new generation of consumers in recent years with its popular TikTok campaigns and celebrity-driven advertising campaigns. The company currently controls a roughly 12% share of the U.S. color cosmetics market, while its total international penetration compared to beauty brand peers is just 16%.

These figures are impressive for a brand like e.l.f. that has long stood up to the competition of more established mass beauty retailers with its high-quality, vegan, and affordable products. E.l.f. Beauty has expanded exponentially through the years from lucrative partnerships with retailers like Target, Walmart, and Ulta Beauty; growth of its own personal brands; and acquisitions of third-party brands.

Currently, the company is one of the top cosmetic brands sold at Target, accounting for over 21% of cosmetics sales for the retailer in e.l.f.’s first quarter of fiscal 2025. Apart from e.l.f. cosmetics, the company also boasts brands including e.l.f. SKIN, Keys Soulcare, Naturium, and Well People. Management estimates that the company has only penetrated approximately 2% of the skincare market at present, despite expanding consumption in the mass skincare category by 45%.

In e.l.f.’s fiscal Q1, ended June 30, the company brought in net sales of $324.5 million, up 50% year over year. Net income came in just shy of $48 million for the quarter, while the company had $109 million in cash on hand at the end of the period. Investors might be underestimating the growth potential of the stock over the next three to five years, but that could present an opportunity for some to buy shares on the dip.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,266!*

• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,047!*

• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $389,794!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer, Target, Ulta Beauty, Walmart, and e.l.f. Beauty. The Motley Fool has a disclosure policy.

2 Unstoppable Growth Stocks to Buy Right Now for Less than $200 was originally published by The Motley Fool