For most Americans, that extra $1,000 will be used to pay bills or fund a fun vacation. But if you put that money into the stock market, you could be poised to generate impressive returns over the long term. discuss the advantages and disadvantages of Nvidia (NASDAQ:NVDA) and lucky coffee (OTC:LKNC.Y) Then decide whether the stock is worth buying.
Nvidia
Nvidia continues to dominate the market, with its stock up an impressive 179% year-to-date, making it one of the top performers in 2024. generative artificial intelligence (AI) industry. Performance continues to improve, and there are no signs that the company will lose its dominant position anytime soon.
Earnings for the third quarter of fiscal 2025 were another tough one for chipmakers. Revenue increased 94% to $35.1 billion, driven by continued demand for advanced products. graphics processing unit (GPU), used to run and train AI algorithms. The company is expected to maintain its impressive growth rate through new product releases such as Blackwell, a new family of GPUs designed to increase the speed and efficiency of AI workloads.
However, Nvidia has no problem selling its products to cloud infrastructure giants such as: alphabet and meta platformthe industry remains speculative. Monetizing consumer AI is not easy. Industry leader OpenAI is expected to burn through $5 billion this year. It’s unclear how long Silicon Valley can withstand these losses before scaling back AI. Capital investment.
Having said that, Nvidia stock trades at a forward price-to-earnings ratio (P/E) of 32x, making it very affordable considering its triple-digit growth rate. The company’s valuation appears to factor in the industry’s potential challenges.
lucky coffee
Luckin Coffee has been a staple of my portfolio since 2021, but its performance started to stall and the stock price fell 18% in 2024. Competition that hurts growth and a slowing Chinese economy are weighing on coffee chains’ valuations. Having said that, of opening of New markets like the US could spark a sustainable turnaround.
Net revenues for the quarter increased 41% year-over-year to $1.45 billion, driven by organic growth and the opening of 1,382 new stores (total of 21,343 stores). While this is an impressive growth rate for most companies, it represents a sharp slowdown from the 85% growth rate reported during the same period. of 2023. The slowdown is likely due to China’s economic downturn and competition from rival Cotti Coffee, which mimics Luckin’s drink range and contactless service.
In the coming years, Luckin may reaccelerate its growth through international expansion. The chain plans to enter the U.S. market as early as next year, expanding into major cities with large Chinese student populations, such as New York, according to the Financial Times.. Luckin’s vertical integration (building its own roasting plant) could potentially help weaken established rivals such as: starbucks About the price.
The forward price/earnings ratio is only 14 timesLuckin Coffee stock is surprisingly cheap.especially if U.S. expansion is successful. The company is likely still trading at a deep discount due to its 2020 fraud scandal, giving investors a chance to bet on a comeback.
Which stocks should I buy?
Image source: Getty Images.
Nvidia’s stock price has dramatically outperformed Luckin Coffee’s this year, but new investors looking to buy the stock now may be late to the party. While demand for AI infrastructure remains strong, the consumer side of the industry appears to be far from mainstream adoption.
I think Luckin Coffee stock is poised to perform better in the coming years with a reasonable valuation and expansion into the US and other large markets.
Should you invest $1,000 in Nvidia right now?
Before buying Nvidia stock, consider the following:
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Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Will Ebiefung holds a position at Luckin Coffee. The Motley Fool has positions in and recommends Alphabet, Luckin Coffee, Meta Platforms, Nvidia, and Starbucks. The Motley Fool has a disclosure policy.
