There’s no denying it: the stock market is red hot. He S&P 500, Nasdaq Compositeand Dow Jones Industrial Average have increased approximately 25%, 31% and 13%, respectively, in the last 12 months. Many individual stocks rose even higher.
But here’s the thing: touching red-hot objects can cause burns.
So is now the time to accumulate shares or play it cool? This week, a panel of Motley Fool contributors examined three of the hottest stocks on Wall Street: Amazon (NASDAQ:AMZN), Strike crowd (NASDAQ:CRWD)and NVIDIA (NASDAQ: NVDA).
Amazon is up 45% over the past year. Here’s why it could go higher.
Justin Pope (Amazon): Shares of cloud and e-commerce giant Amazon have risen 45% over the past 12 months, outperforming the S&P 500 by a comfortable margin. But at a time when many stocks have outperformed their fundamentals and could face setbacks, Amazon could be ready to move up a notch.
Amazon’s culture is arguably my favorite part of the company. He tirelessly invests his profits in the company to grow it, always looking for his next big breakthrough.
The pandemic boosted demand for e-commerce and digital services, affecting Amazon’s core retail and cloud businesses. The company stepped up and invested significantly in increasing its supply chain capacity and cloud capabilities. You can see that Amazon has spent tens of billions of dollars on capital expenditures in recent years:
Now, Amazon is starting to see a return on all that invested capital. Its cash flow from operating the business is at all-time highs and earnings are poised for a stretch of high-speed growth. Analysts believe the company could grow earnings by an average of 30% annually over three to five years; Meanwhile, shares trade at “just” 39 times earnings today. In retrospect, that valuation will look like a bargain if Amazon’s earnings growth meets expectations.
Over the years, Amazon has shown that it will continue to swing for the fences by investing in itself. Not every Amazon project will be a success, but long-term investors can comfortably put their money behind a management team like that. Fortunately, you may not need to wait long for stocks to generate wealth for shareholders, even if you’re relatively new to the world of stocks. The stock’s 45% rise is notable, but the reality is that there could be more to come.
CrowdStrike run is cause for celebration and concern
Will Healy (Massive strike): Perhaps no cybersecurity stock has benefited more from the rise of artificial intelligence (AI) than CrowdStrike. The endpoint security specialist has surged 151% over the past year as it capitalized on the threats and functionality brought by emerging technology. Amid this rise, the company will become the newest member of the S&P 500 on June 24.
CrowdStrike’s Falcon platform has long been a leader in endpoint security, a segment focused on protecting laptops, smartphones, servers and other devices.
Additionally, the company offers what it says is the most comprehensive native AI defense, using the highest fidelity security data to train its AI models. As such, the more they train their models, the better they defend customer networks.
CrowdStrike has also maintained its growth in an environment where customers increasingly deal with a single cybersecurity provider. Its management said in its fiscal first-quarter 2025 earnings call (which ended April 30) that 65% of its customers have purchased five or more of its modules. Additionally, deals involving eight or more modules increased 95% in the quarter, a factor that could indicate its market share is increasing.
The question for potential buyers is whether they waited too long to buy the stock. Revenue in the fiscal first quarter grew 33% annually to $921 million, slower than the 36% increase in fiscal 2024. Additionally, if fiscal 2025 revenue comes in at the midpoint of the $3 forecast, 97 billion to $4.01 billion, will slow to 30%.
That slowdown in revenue growth may lead investors to question its elevated sales multiple. CrowdStrike’s price-to-sales (P/S) ratio is now 29, well above the average P/S ratio of 20 over the past year and about 10 times the average sales multiple of 2.9 for the S&P 500. Such valuations increase the danger of a pullback in the stock.
Admittedly, a high P/S ratio doesn’t undermine your long-term bullish thesis. However, investors should probably wait for a lower sales multiple before putting more money to work on CrowdStrike.
Nvidia has climbed the mountain and is now the most valuable company in the world
Jake Lerch (Nvidia): With a 226% increase in the last 12 months, Nvidia’s recent rise will go down in history. The company recently surpassed microsoft become the most valuable company in the world, with a market capitalization that exceeds $3.4 trillion.
For many investors, however, the question is whether Nvidia’s rally can continue. Can a stock that has already risen more than 10 times in less than two years In fact be a elegant long-term investment?
To answer this question, you have to dig into the numbers, and they are surprising.
Let’s start with Nvidia’s revenue. The company’s trailing-12-month sales more than tripled, from a low of $26 billion to nearly $80 billion. What’s more, revenue estimates continue to skyrocket. For Nvidia’s current fiscal year (ending January 28, 2025), analysts predict $120 billion; Sales estimates rise to $160 billion the following year. In summary, Wall Street expects the company’s total sales in 2026 to be approximately 6 times larger. is Total 2022.
So despite the company’s impressive revenue and lofty estimates of its future revenue, Nvidia stock is still ahead of the numbers. This is easy to see if you look at the stock’s forward price-to-sales (P/S) ratio, which is near its all-time high of 46x.
However, while the stock’s high valuation is notable, that doesn’t mean Nvidia isn’t a great long-term investment. Remember, the reason the company’s sales are increasing is because Nvidia’s products are hills Wanted hardware worldwide. They are helping to shape cutting-edge technology. that is driving the AI revolution.
If you think AI is The technology which will dominate the next 10 to 20 years, investing in Nvidia today, even with its high valuation, still makes sense.
Should you invest $1,000 in Nvidia right now?
Before you buy Nvidia stock, consider this:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jake Lerch has positions at Amazon, CrowdStrike, and Nvidia. Justin Pope has no position in any of the stocks mentioned. Will Healy has positions at CrowdStrike. The Motley Fool ranks and recommends Amazon, CrowdStrike, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Up 45% to 226%, Are These Three Stocks Too Attractive to Buy Now? was originally published by The Motley Fool