This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Artificial intelligence (AI) stocks have been in fine form on the stock market in 2025, and this is evident from the healthy gains of 21% clocked by the tech-laden Nasdaq Composite index so far this year.

AI stocks such as Nvidia, Broadcom, AMD, Palantir, and others have delivered outstanding gains to investors in 2025. However, not all companies benefiting from the AI revolution have turned out to be great investments. Meta Platforms (NASDAQ: META) is one such name.

The “Magnificent Seven” stock is up just 4% this year, and that’s because it has witnessed a sharp pullback of late. The stock fell substantially after releasing its third-quarter results on Oct. 29. A massive noncash tax charge that led the company to miss Wall Street’s earnings estimates, and Meta’s decision to boost capital spending to fund its AI initiatives have been weighing on its shares of late.

However, it won’t be surprising to see this tech giant regain its mojo and deliver stronger gains than some of the more popular AI stocks that have outperformed it this year. Let’s see why that may be the case. 

Meta Platforms’ AI efforts are paying off

Meta Platforms reported an impressive year-over-year increase of 26% in Q3 revenue to $51.2 billion. The company’s non-GAAP earnings would have landed at $6.73 per share as compared to the year-ago period’s reading of $6.03 per share had it not been for the $15.9 billion non-cash income tax charge related to the implementation of the “big, beautiful bill.”

Importantly, Meta management believes that it will “recognize significant cash tax savings for the remainder of the current year and future years under the new law.” What’s worth noting is that Meta’s earnings would have increased by double digits (excluding the impact of the tax charge). That’s impressive considering that its costs and expenses increased by 32% year over year in Q3, exceeding its revenue growth.

AI is a key reason why Meta’s bottom line is increasing at a healthy pace despite the higher spending. The company’s AI-driven content recommendations are leading to higher engagement on its social media properties. Specifically, Meta saw a 5% jump in the time spent on Facebook last quarter, along with a 10% jump in time spent on Threads.

This higher engagement combined with Meta’s AI-powered ad tools is contributing to an increase in ad impressions delivered, as well as an increase in the average price per ad. Meta’s ad impressions across its family of apps increased by 14% year over year in Q3. Additionally, the average price per ad jumped by 10%.

It is easy to see why that’s the case. Meta’s AI advertisement solutions are delivering a 22% increase in return on ad spend as compared to non-AI ad tools. The company points out that “for every dollar U.S. advertisers spend with Meta, they see a $4.52 return when they use our new AI-driven advertising tools.”

Not surprisingly, Meta says that it has already achieved an annual revenue run rate of over $60 billion for its end-to-end AI-equipped advertising tools. That suggests Meta generated $15 billion in revenue last quarter from its AI-powered ad tools. This puts the company on track to corner a sizable chunk of the $107 billion revenue opportunity that the adoption of AI tools within the marketing space is expected to create by 2028.

Given that Meta is on track to end 2025 with $198.5 billion in revenue, the AI-related opportunity within advertising should eventually allow the company to deliver solid incremental growth over the next three years.

But what about the expenses?

Meta is going all out to build more AI-equipped tools. This explains why the company is now on track to reach $71 billion in capital expenses this year as compared to its earlier expectation of $69 billion. That’s a big jump over the $39.2 billion that Meta spent in 2024. What’s more, the company points out that its expenses will grow at a faster rate in 2026.

This is a key reason why Meta stock has struggled of late, as investors are probably questioning the rationale behind the heavy AI-related spend the tech giant is incurring. But the good part is that AI is indeed driving tangible growth for Meta, as we saw in the discussion above. That’s why it makes sense for the company to continue investing more in AI infrastructure and talent.

This probably explains why analysts have raised their revenue forecasts for Meta.

META Revenue Estimates for Current Fiscal Year data by YCharts

Even better, investors are now getting a good deal on this stock. It is trading at 8.3 times sales, which is lower than the U.S. technology sector’s average price-to-sales ratio of 9.1. Assuming Meta hits $271 billion in sales at the end of 2027 and trades in line with the tech sector’s average, its market cap could jump to $2.46 trillion.

That suggests a potential jump of nearly 60% from its current market cap. However, the fast-growing adoption of AI tools in the ad space and the head start that Meta has over here suggest that it could end up delivering faster growth, and that could set the stock up for bigger gains. That’s why it would be wise for investors to buy this underperforming tech stock before it steps on the gas.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Prediction: This AI stock could quietly outperform Wall Street favorites appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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• Why is Wall Street so bearish on Meta? There’s 1 key reason.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, Meta Platforms, Nvidia, and Palantir Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom. The Motley Fool Australia has recommended Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Reece Ltd (ASX: REH) share price is in focus after the company released a trading update. The plumbing and HVAC distributor reported 8% revenue growth to $2.41 billion for 1Q FY26, while EBITDA fell 8% to $222 million.

What did Reece report?

• Group sales revenue of $2,407 million, up 8% on prior year (6% on constant currency basis)
• Like-for-like sales increased 2%, with low single-digit growth in ANZ and decline in US
• EBITDA down 8% to $222 million
• EBIT decreased 18% to $129 million, impacted by higher depreciation and amortisation
• Added 15 net new branches during the quarter (5 in ANZ, 10 in US)
• Completed $365 million off-market share buyback at $13.00 per share

What else do investors need to know?

Reece’s sales growth was underpinned by ongoing network expansion across Australia, New Zealand, and the United States, even as underlying markets remained subdued. The company noted elevated costs related to growth investments and labour cost inflation, especially in the US.

The recently completed off-market share buyback returned $365 million to shareholders, funded through a mix of cash and debt. Reece expects gross interest expense on debt and borrowings to be between $65 million and $75 million for FY26.

What did Reece management say?

Peter Wilson, Chair and CEO, said:

As we expected, the first quarter was soft reflecting subdued housing markets. Sales were supported by network expansion over the past 12 months. Costs remain elevated driven by network growth, ongoing investment in core capabilities and the impact of labour cost inflation in competitive markets, especially the US. We are still expecting a period of soft activity in both regions. We have navigated cycles before and, as ever, take a long-term view and will continue to invest to build a stronger business for our team and customers.

What’s next for Reece?

Reece continues to focus on network growth and investing in its core capabilities, despite the soft market environment in both ANZ and the US. Management remains committed to a long-term approach and building resilience for future cycles.

Shareholders can expect ongoing investment to support both expansion and operational improvements, while the group manages costs and monitors borrowing levels following the recent buyback.

Reece share price snapshot

Over the past 12 months, Reece shares have declined 55%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 3% over the same period.

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The post Reece 1Q FY26: Revenue growth, profit margin pressures, and a $365m buyback appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

WiseTech Global Ltd (ASX: WTC) shares are falling on Friday.

In early trade, the logistics solutions technology company’s shares are down 4% to $61.50.

Why are WiseTech shares sinking?

Investors have been selling the company’s shares today after a market selloff overshadowed the release of an update at its annual general meeting.

At the time of writing, the ASX 200 index is down 2% and the S&P/ASX All Technology Index is down 2.3%.

This follows an unexpectedly poor night of trade on Wall Street on Thursday, when the market was expecting a positive session following a strong result from Nvidia (NASDAQ: NVDA).

Annual general meeting update

Ahead of the main event today, WiseTech released an update on its performance in FY 2026.

Pleasingly, the company appears to be trading in line with expectations so far this year. As a result, WiseTech’s new CEO, Zubin Appoo, has reaffirmed its guidance for FY 2026. He said:

Looking ahead, we reconfirm our guidance and expect revenue between $1.39 and $1.44 billion and EBITDA of $550 to $585 million. As outlined when we announced our FY25 Results in August, the e2open integration will temporarily impact margins – and that is exactly as planned.

We have a clear execution roadmap, backed by more than three decades of successfully integrating strategic acquisitions and rebuilding margin strength. We know how to do this. Through disciplined execution, cost alignment, and synergy realization, we will restore and expand our margin profile over the medium term.

At the event, WiseTech’s founder, Richard White, spoke positively about the company’s outlook. He said:

As we look ahead, I see a WiseTech that has increased its reach significantly, has access to larger addressable market with new adjacencies, is more innovative, more global, and more deeply embedded in the world’s logistics processes and supply chains than ever before.

With Zubin leading a talented team, a renewed and diverse Board, and an unmatched product suite, we are focused on the opportunities ahead. As one of Australia’s most successful global tech companies, and the leader in technology solutions for global trade and supply chain logistics, we’re continuing to push the boundaries of innovation in one of the world’s most vital industries, driving the next phase of our growth.

Shareholders won’t have to wait long until there is a further update from the company.

It notes that on 3 December it will be holding its Investor Day. At the event, the company plans to provide more details on the next phase of its strategy. This includes the rollout of its new commercial model, and progress relating to Container Transport Optimization and the e2open integration.

The post Why are WiseTech Global shares tumbling 4% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Any time Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) adds a new investment to its stock portfolio, it tends to grab attention. And because Berkshire has been much more of a seller of stocks than a buyer of them over the past two years, the company’s portfolio additions are likely to draw even more interest.  

Berkshire’s latest Form 13F filing revealed that in the third quarter, the conglomerate opened an approximately $5 billion position in Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), which also happens to be one of my favorite stocks. Whether the soon-to-retire Buffett or his successor, Greg Abel, was behind that decision is unknown, but back in 2017, Buffett famously admitted that he wished he had invested in the company then called Google years earlier, when he saw that one of his insurance subsidiaries, Geico, was paying it $10 to $11 per click.

Let’s look at what Berkshire Hathaway may see in Alphabet today, and why its portfolio managers decided now was the right time to invest.

A wide moat and growth opportunities

With the rise of the artificial intelligence (AI) trend, Alphabet’s Google search engine is facing serious and intensifying competition for the first time in a very long time. However, the company still has a wide moat in this area. The search and AI chatbot businesses are currently merging together into what I’d describe as the “discovery” business. And in that space, Google has a couple of powerful advantages.

Before I get into those advantages, it should not be overlooked that Alphabet has developed one of the world’s top foundational large language models (LLMs) in Gemini, which competes with the top models from OpenAI and others. Gemini, as a stand-alone app, has been taking market share, helped by the popularity of its Nano Banana AI image-editing tool.

But Alphabet’s biggest advantage is distribution. It owns both the world’s leading browser (Chrome) and the world’s leading smartphone operating system (Android). Both command global market shares of more than 70%. It also has a search-revenue sharing deal with Apple that makes Google the default search engine on its devices. This essentially makes Alphabet the gateway to the internet for most people outside of China.

At the same time, the company has infused Gemini and other AI enhancements across its search solutions. AI features such as Lens, Circle to Search, and AI Overviews are helping drive query growth. Meanwhile, it has just started rolling out AI Mode, which lets users easily toggle between traditional search results and an AI chatbot experience. This is a powerful tool, as users don’t have to change their behavior and use a separate app.

Alphabet’s ad network is another huge edge. The company has spent decades building one of the most comprehensive digital ad networks on the planet — one that can just as easily handle a local campaign from a small merchant as a global campaign from a major brand. Advertisers know its platform works, and they tend to stick with what they know will be successful. Many of its competitors, meanwhile, are still trying to figure out their business models and are burning through cash.

Beyond search

Outside of search, Alphabet also has what is arguably the best-positioned cloud computing platform on the planet. It has the most complete tech stack, which should be a long-term differentiator. Gemini is one of the world’s leading foundational AI models, and the company has top software platforms, such as Vertex AI, to help customers create and customize their own AI models based on its Gemini foundational model. However, it doesn’t stop there.

Perhaps the company’s biggest edge in cloud computing comes from its custom AI accelerator chips, which it calls tensor processing units (TPUs). While other companies are starting to invest in custom AI chips, Alphabet has spent more than a decade developing its TPUs, which are now in their seventh generation. This has helped put it far ahead of the pack in its efforts, and gives it a big advantage in cost and power efficiency for certain types of AI workloads, particularly relative to more general-purpose graphics processing units (GPUs). As inference becomes a larger and larger share of the total AI-related computing workload, this will give Alphabet a huge advantage, especially given that access to enough electricity to power data centers is one of AI’s biggest bottlenecks.

In addition to cloud computing, Alphabet also owns YouTube, the world’s most-watched streaming service, which continues to generate solid growth. It also has some promising emerging bets. It has made real progress in quantum computing, meaningfully reducing that technology’s error rate with its Willow chip, while its Waymo robotaxi business is expanding rapidly.

Trading at a forward price-to-earnings (P/E) ratio of around 25.5 times 2026 analyst estimates, Alphabet isn’t expensive for a company with all it has to offer. As such, investors can feel comfortable following Berkshire Hathaway’s lead and buying the stock now.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Warren Buffett’s Berkshire Hathaway just bought one of my favorite stocks. Is it time to pile in? appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Geoffrey Seiler has positions in Alphabet. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, and Berkshire Hathaway. The Motley Fool Australia has recommended Alphabet, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Accent Group Ltd (ASX: AX1) shares are on the slide on Friday.

In morning trade, the ASX 300 stock is down 18% to 98.5 cents.

Why is this ASX 300 stock crashing?

Investors have been selling the company’s shares following release of the footwear focused retailer’s trading update.

According to the release, the HypeDC and Platypus owner revealed that sales were up 3.7% during the first 20 weeks of FY 2026. This includes wholesale sales and sales from new stores.

Things aren’t quite as positive on a like for like basis, with retail sales down 0.4% on the prior corresponding period. Though, there are signs of improvement, with like for like sales growing 0.4% during October.

The ASX 300 stock also revealed that as of the end of October (Week 18), its year to date gross margin was 160 basis points (1.6%) below last year. Management notes that this is reflective of the elevated promotional environment.

Commenting on current trading conditions, management said:

Retail market conditions remain challenging, including ongoing promotional activity. The sports category continued to perform well, particularly running and performance footwear across The Athletes Foot and distributed brands HOKA, Saucony and Merrell. Lifestyle footwear sales have been soft and below expectations. Wholesale sales are ahead of prior year, with forward orders remaining strong into the second half of FY26.

Positively, cost of doing business (CODB) and its inventory continue to be well managed and are in line with expectations.

FY 2026 guidance

Given that like for like sales have been below expectations of low single-digit growth and its gross margin has been below last year’s levels, the ASX 300 stock expects its first half earnings before interest and tax (EBIT) to be in the range of $55 million to $60 million. This is down sharply from $80.7 million in the first half of FY 2025.

Looking ahead, management is guiding to full year EBIT in the range of $85 million to $95 million. This will be down from $110.2 million in FY 2025.

Management also provided an update on its store network. It highlights that the Skechers and HOKA agreements are continuing and the first Sport Direct store has now opened. It said:

As previously announced, the Company has extended the Skechers distribution agreement to 2035 and recently extended the HOKA distribution agreement by 5 years to 2030. Due to the change of ownership of Dickies, a decision has been taken to discontinue this non-material distribution agreement.

The Company is pleased to report the successful opening of the first Sports Direct store at Fountain Gate, Victoria, on 15 November 2025, alongside the launch of the Sports Direct online store — a key milestone in the brand’s rollout across Australia and New Zealand. A further 3 stores are planned for the remainder of FY26, with at least 50 stores targeted over the next 6 years.

The post Why is this ASX 300 stock crashing 18% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Accent Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Sims Ltd (ASX: SGM) share price is in focus today as the company holds its annual general meeting (AGM). In FY25, the company reported a strong uplift in underlying EBIT—up nearly 200% to $174.9 million for FY25—and declared a fully franked full-year dividend of 23 cents per share.

What did Sims report in FY25?

• Underlying EBIT rose 193% to $174.9 million for FY25.
• Full-year dividend of 23 cents per share, fully franked (final dividend 13 cents).
• Underlying free cash flow increased to $107 million.
• Sims Lifecycle Services EBIT surged 84% year-on-year.
• Record-low Lost Time Injury Frequency Rate of 0.11.
• Achieved 49% reduction in Scope 1 and 2 emissions since FY20 baseline.

What else do investors need to know?

Sims boosted its FY25 performance by simplifying its business, including the divestment of its UK Metal operations, and focusing on higher-margin and domestic sales, especially in its North American and ANZ Metals businesses. SA Recycling performed well, making several bolt-on US acquisitions and increasing EBIT contribution by 17%.

Sims Lifecycle Services expanded rapidly, capturing strong demand from the fast-growing data centre segment and artificial intelligence trends. Sustainability remained central, with the group surpassing its 2025 climate targets by achieving a 49% emissions cut and sourcing 100% renewable power for its operated businesses.

What did Sims management say?

Stephen Mikkelsen, Group Chief Executive Officer & Managing Director said:

I am very proud of what the team has accomplished this year. Fiscal Year 2025 was a year of delivery against our turnaround plan, and the results reflect the progress we’ve made. We simplified our portfolio with the divestment of UK Metal, maintained strict cost discipline, and focused on metal margins, growth in Sims Lifecycle Services, and a strong contribution from SA Recycling. Together, these actions lifted underlying EBIT nearly 200 percent to $174.9 million.

What’s next for Sims?

Sims expects a meaningful improvement in group Underlying EBIT for the first half of FY26 compared to the same period last year, helped by resilient volumes and firm prices in non-ferrous metals. The company sees strong growth potential in recycling for electric arc furnaces and data centre demand, particularly through Sims Lifecycle Services.

Ongoing headwinds remain in ferrous markets, with elevated Chinese steel exports impacting both domestic and export prices. Sims plans to maintain margin discipline, invest for growth, and pursue sustainability targets as it supports decarbonisation and the circular economy.

Sims share price snapshot

Over the past 12 months, Sims shares have risen 21%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has increased 3% over the same period.

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The post Sims holds AGM following a strong FY25 earnings report appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The ASX is set to welcome a new $300 million metals manufacturing company to the bourse in the coming weeks, with Advanced Energy Minerals Ltd (ASX: AEM) looking to raise up to $50 million in an initial public offer.

The company, in a prospectus lodged with the ASX, said it is a manufacturer of high purity alumina (HPA) at its production facility in Cap-Chat, Canada, where it recently finished a two-year capital works program.

Expansion funds sought

The existing facility has a 2000 tonne per year production capacity, with the company raising new funds to help expand production to 3000 tonnes per year. As Richard Seville, the company’s chair, explains, this would make it a major player in the HPA market.

At 3,000 tonnes per annum, AEM would be the third largest HPA producer in the world outside of China.

Mr Seville goes on to explain that demand for HPA is growing rapidly.

The HPA market has grown rapidly over recent years with a compound annual growth rate of approximately 13.6% over the period from 2013 to 2024, and with double-digit growth forecast to continue for the next ten years. This growth has been driven by mass adoption of LED technology for energy efficient lighting and supported by significant demand growth in semi-conductors, advanced ceramics and lithium-ion batteries. All of these sectors are forecast to see continued growth underpinned by increased demand for processing and data storage associated with artificial intelligence.

Mr Seville said independent research from CM Group has indicated that there would be potential undersupply of HPA next year, and also for the period from 2029 to 2034.

As a result, we consider this to be an excellent time to be entering the HPA market. In response to these market dynamics, CM Group have forecast prices to increase from the current US$25/kg range to US$40/kg in the longer term.

Not your everyday commodity

Mr Seville said HPA was unlike most other commodities in that it needed to be tailored to meet each customer’s needs in terms of purity, particle size, and morphology, with the time period for qualifying a product with a customer taking as long as two years.

AEM, he said, was well progressed in this area, putting it in a strong position.

AEM has been able to advance this qualification process with a range of customers as the Cap-Chat Plant has consistently produced HPA on specification for over three years. As a result, AEM currently has eleven projects which have completed the qualification process phase and are in the commercial relationship stage, with twenty-two Projects in the industrial trials phase, and eighty-six in laboratory trials.

The company is aiming to raise at least $40 million via the issue of new shares at 53 cents each, with oversubscriptions of $10 million allowed under the offer.

Advanced Energy Minerals expects to close off the initial public offer of shares on November 28, with trading on the ASX to start on December 12.

The company would be valued at $307.2 million on listing based on raising the minimum $40 million.  

The post New critical minerals manufacturer aiming to list on the ASX appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

While the stock market has been fretting in recent weeks about the idea of an artificial intelligence (AI) bubble, Nvidia (NASDAQ: NVDA) may have just let the air out of those fears. The company’s earnings report for its fiscal third quarter of 2026 shows that the appetite for AI stocks — and Nvidia’s groundbreaking infrastructure in particular — remains ravenous. 

A look at Nvidia’s report

Nvidia’s earnings report after the bell on Nov. 19 showed record revenue of $57 billion, which is up 62% from last year and 22% on a sequential basis. Most of that revenue comes from Nvidia’s data center sales, which recorded $51.2 billion in revenue – up 66% from last year.

Nvidia’s gross margin was an incredible 73.4% with net income of $31.9 billion — up 65% from last year and 21% from the second quarter. Earnings per share were up 67% from a year ago to $1.30.

“Blackwell sales are off the charts, and cloud GPUs are sold out,” CEO Jensen Huang said. “Compute demand keeps accelerating and compounding across training and inference – each growing exponentially. We’ve entered the virtuous cycle of AI.

“The AI ecosystem is scaling fast — with more new foundation model makers, more AI start-ups, across more industries, and in more countries,” Huang said. “AI is going everywhere, doing everything, all at once.”

Nvidia’s guidance for its fiscal fourth quarter calls for revenue of $65 billion, and for margins to improve to between 74.8% and 75%.

What Nvidia’s earnings mean for AI demand

If there’s an AI bubble to be had, it won’t be with Nvidia or its major customers. Nvidia already has contracts with OpenAI, which is using at least 10 gigawatts of Nvidia architecture, and has a new agreement with Anthropic to build at least 1 gigawatt of compute power with Nvidia’s chips.

In addition, Nvidia has partnerships with Alphabet‘s Google Cloud, Microsoft Azure, Oracle, and xAI to build out domestic AI infrastructure — all using Nvidia’s chips.

That’s why Nvidia’s stock jumped 4% in after-hours trading after the company dropped its earnings report. Shares of other major AI stocks were also up – Advanced Micro Devices rose 3% in after-hours trading, Broadcom was up 2%, and Palantir Technologies was up 2.5%.

Nvidia’s earnings report may be just the thing that the stock market — and AI stocks in general — need to finish the year strong. The technology sector has been slipping in recent weeks, having just broken even in the last month after a better than 20% gain in the first 10 months of 2025. With Nvidia showing continued strength and forecasting even better margins and revenue in the fourth quarter, fears of an AI bubble may fade away quickly.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post AI bubble worries are rising. Nvidia’s $31.9 billion profit says otherwise. appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Patrick Sanders has positions in Nvidia and Palantir Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, Alphabet, Microsoft, Nvidia, Oracle, and Palantir Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Broadcom and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Advanced Micro Devices, Alphabet, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Commonwealth Bank of Australia (ASX: CBA) share price has risen strongly over the past five years.

Since this time in 2020, the banking giant’s shares have risen a sizeable 91%.

In addition, during this time, Australia’s largest bank has rewarded shareholders with 10 dividend payments.

Clearly, it was a smart move buying CBA’s shares half a decade ago.

Valuation looking stretched

Given this strong run, it may not come as a surprise to learn that most brokers believe that the CBA share price is overvalued now.

In fact, it has been described by some analysts as the most expensive bank in the world.

And while a premium is arguably justified due to its quality, the team at Bell Potter believes that its valuation is “disconnected from fundamentals.”

Following a review of the banking sector, the broker has gone further underweight with its CBA holding. This makes the bank its largest active underweight position in its Core portfolio.

Commenting on the big four bank, Bell Potter said:

We are moving further Underweight in CBA, establishing it as our largest active underweight position in the Core portfolio. The bank’s valuation premium has expanded to an extreme and, in our view, unsustainable level, trading at a P/E multiple that is ~40% above the peer average. While a premium for its high-quality franchise and strong returns is warranted, the current gap is disconnected from fundamentals.

Bell Potter believes that CBA’s recent quarterly update didn’t provide any justification for its lofty valuation and appears concerned that its valuation gap will close in the near future. It explains:

The recent 1Q26 trading update underscored this, revealing the bank is not immune to the sector-wide pressures of NIM attrition (from competition and deposit mix) and rising costs. CBA’s result was “unremarkable” and showed a lack of differentiation versus peers. It faces the same wage and technology inflation as others, with its 1Q cost growth of 4% coming in a seasonally lower quarter for IT spend, implying costs will accelerate. With earnings momentum no better than its much cheaper rivals, we believe this valuation gap will continue to be under pressure.

The broker currently has a preference for ANZ Group Holdings Ltd (ASX: ANZ) on valuation grounds. It is the only bank that it has an overweight position in its Core portfolio. It adds:

We are moving to an overweight position in ANZ, which we see as the clear relative value proposition and our preferred holding in the sector. ANZ delivered the cleanest and highest-quality result of the recent reporting season, providing a tangible “self-help” story that NAB and CBA lack, while Westpac’s is relatively priced in. The key differentiator was costs. Management’s guidance for a 3% decline in the underlying cost base for FY26 is unique among the majors and provides a clear path to earnings growth, even in a flat revenue environment.

The post Why the CBA share price valuation is ‘disconnected from fundamentals’ appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.