Toast, Inc.

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Vanguard Small-Cap Growth ETF (Symbol: VBK) where we have detected an approximate $121.1 million dollar outflow -- that's a 0.6% decrease week over week (from 68,722,261 to 68,317,192). Among the largest underlying components of VBK, in trading today PTC Inc (Symbol: PTC) is down about 2.6%, SoFi Technologies Inc (Symbol: SOFI) is off about 0.8%, and Toast Inc (Symbol: TOST) is lower by about 0.5%. For a complete list of holdings, visit the VBK Holdings page » The chart below shows the one year price performance of VBK, versus its 200 day moving average:
Looking at the chart above, VBK's low point in its 52 week range is $214.77 per share, with $304.59 as the 52 week high point — that compares with a last trade of $296.01. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Also see:
Insider Buying
WRI Historical Stock Prices
PTIX YTD Return
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

VBK, PTC, SOFI, TOST: ETF Outflow Alert

In trading on Monday, shares of Toast Inc (Symbol: TOST) crossed below their 200 day moving average of $40.10, changing hands as low as $40.01 per share. Toast Inc shares are currently trading down about 2.3% on the day. The chart below shows the one year performance of TOST shares, versus its 200 day moving average:
Looking at the chart above, TOST's low point in its 52 week range is $23.06 per share, with $49.66 as the 52 week high point — that compares with a last trade of $40.23.
Click here to find out which 9 other stocks recently crossed below their 200 day moving average »
Also see:
PQ Historical Stock Prices
PVTL Videos
ETFs Holding REED
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Notable Two Hundred Day Moving Average Cross - TOST

Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in Braze Inc (Symbol: BRZE), where a total volume of 6,745 contracts has been traded thus far today, a contract volume which is representative of approximately 674,500 underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 47% of BRZE's average daily trading volume over the past month, of 1.4 million shares. Particularly high volume was seen for the $35 strike call option expiring September 19, 2025, with 1,008 contracts trading so far today, representing approximately 100,800 underlying shares of BRZE. Below is a chart showing BRZE's trailing twelve month trading history, with the $35 strike highlighted in orange:
Toast Inc (Symbol: TOST) saw options trading volume of 36,561 contracts, representing approximately 3.7 million underlying shares or approximately 46.7% of TOST's average daily trading volume over the past month, of 7.8 million shares. Especially high volume was seen for the $41.50 strike call option expiring September 05, 2025, with 16,829 contracts trading so far today, representing approximately 1.7 million underlying shares of TOST. Below is a chart showing TOST's trailing twelve month trading history, with the $41.50 strike highlighted in orange:
And eBay Inc. (Symbol: EBAY) saw options trading volume of 26,836 contracts, representing approximately 2.7 million underlying shares or approximately 45.5% of EBAY's average daily trading volume over the past month, of 5.9 million shares. Particularly high volume was seen for the $85 strike put option expiring September 19, 2025, with 6,189 contracts trading so far today, representing approximately 618,900 underlying shares of EBAY. Below is a chart showing EBAY's trailing twelve month trading history, with the $85 strike highlighted in orange:
For the various different available expirations for BRZE options, TOST options, or EBAY options, visit StockOptionsChannel.com.
Also see:
Funds Holding POWL
PLD Insider Buying
Top Ten Hedge Funds Holding VBND
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Notable Friday Option Activity: BRZE, TOST, EBAY

Why Investors Have Soured on Restaurant Stocks

Below is Validea's guru fundamental report for TOAST INC (TOST). Of the 22 guru strategies we follow, TOST rates highest using our P/B Growth Investor model based on the published strategy of Partha Mohanram. This growth model looks for low book-to-market stocks that exhibit characteristics associated with sustained future growth.
TOAST INC (TOST) is a large-cap growth stock in the Software & Programming industry. The rating using this strategy is 66% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
Detailed Analysis of TOAST INC
More Information on Partha Mohanram
About Partha Mohanram: Sometimes the best investing strategies don't come from the world of investing. Sometimes research that changes the investing world can come from the halls of academia. Partha Mohanram is a great example of this. While academic research has shown that value investing works over time, it has found the opposite for growth investing. Mohanram turned that research on its head by developing a growth model that produced significant market outperformance. His research paper "Separating Winners from Losers among Low Book-to-Market Stocks using Financial Statement Analysis" looked at the criteria that can be used to separate growth stocks that continue their upward trajectory from those that don't. Mohanram is currently the John H. Watson Chair in Value Investing at the University of Toronto and was previously an Associate Professor at the Columbia Business School.
Additional Research Links
About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

TOST Quantitative Stock Analysis

Looking at the underlying holdings of the ETFs in our coverage universe at ETF Channel, we have compared the trading price of each holding against the average analyst 12-month forward target price, and computed the weighted average implied analyst target price for the ETF itself. For the WisdomTree U.S. Efficient Core Fund ETF (Symbol: NTSX), we found that the implied analyst target price for the ETF based upon its underlying holdings is $56.50 per unit.
With NTSX trading at a recent price near $51.34 per unit, that means that analysts see 10.06% upside for this ETF looking through to the average analyst targets of the underlying holdings. Three of NTSX's underlying holdings with notable upside to their analyst target prices are Baxter International Inc (Symbol: BAX), Insulet Corp (Symbol: PODD), and Toast Inc (Symbol: TOST). Although BAX has traded at a recent price of $23.69/share, the average analyst target is 20.00% higher at $28.43/share. Similarly, PODD has 12.46% upside from the recent share price of $307.10 if the average analyst target price of $345.36/share is reached, and analysts on average are expecting TOST to reach a target price of $48.17/share, which is 11.81% above the recent price of $43.08. Below is a twelve month price history chart comparing the stock performance of BAX, PODD, and TOST:
Below is a summary table of the current analyst target prices discussed above:
Name
Symbol
Recent Price
Avg. Analyst 12-Mo. Target
% Upside to Target
WisdomTree U.S. Efficient Core Fund ETF
NTSX
$51.34
$56.50
10.06%
Baxter International Inc
BAX
$23.69
$28.43
20.00%
Insulet Corp
PODD
$307.10
$345.36
12.46%
Toast Inc
TOST
$43.08
$48.17
11.81%
Are analysts justified in these targets, or overly optimistic about where these stocks will be trading 12 months from now? Do the analysts have a valid justification for their targets, or are they behind the curve on recent company and industry developments? A high price target relative to a stock's trading price can reflect optimism about the future, but can also be a precursor to target price downgrades if the targets were a relic of the past. These are questions that require further investor research.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Peek Under The Hood: NTSX Has 10% Upside

Toast, Inc. TOST is set to report second-quarter 2025 results on Aug. 5.
The Zacks Consensus Estimate stands at earnings of 24 cents and has remained unchanged in the past seven days. The company reported earnings of 2 cents per share in the prior-year quarter. The consensus estimate for revenues stands at $1.53 billion, up 23.4% year over year.
TOST has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, while missing in the remaining quarter, the average beat being 197.15%. TOST is one of the leading providers of software-as-a-service (SaaS) and hardware solutions focused on the restaurant market.
Image Source: Zacks Investment Research
What Our Model Predicts for TOST
Our proven model does not conclusively predict an earnings beat for Toast this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
TOST has an Earnings ESP of +1.70% and a Zacks Rank #4 (Sell) at present. You can see the complete list of today’s Zacks #1 Rank stocks her
Factors to Focus on Ahead of TOST’s Q2 Earnings
Healthy sales momentum across Subscription services and Financial Technology solutions segments is likely to have aided TOST’s performance in the second quarter. It expects total subscription and fintech gross profit to grow between 26% and 29% year over year. Adjusted EBITDA is forecast to be between $130 million and $140 million.
The company’s efforts to expand its presence in the core U.S. SMB restaurant market, as well as drive growth across new markets, bode well. TOST registered more than 6,000 net locations in the first quarter of 2025. It ended with approximately 140,000 total customer locations globally at quarter-end, reflecting 25% year-over-year growth. Management expects to post record net adds in the second quarter, and 2025 is now expected to top 2024’s full-year net additions. Toast also reiterated its goal to cross 10,000 locations across enterprise, retail and international markets in 2025.
Toast’s AI-powered tools are positioning it to stay ahead of the curve in restaurant technology. Sous Chef, its AI assistant, is designed to support restaurant operators. Building on this, it has developed ToastIQ, an AI-powered intelligence engine that combines restaurant expertise, data and AI to enhance its platform. In the last reported quarter, adopters, such as Mission Boathouse in Massachusetts and Felipe’s Taqueria, experienced a positive impact. Mission Boat House achieved a 6% higher average order volume through the menu upsell tool, powered by ToastIQ. Felipe’s Taqueria witnessed a 10 times return on ad spend through the use of TOST’s AI-powered advertising offering.
However, management highlighted that it was closely monitoring the macro environment and emphasized restaurants' ability to navigate macro challenges. Despite Toast’s confidence, the restaurant industry is still highly sensitive to consumer spending, labor inflation and supply chain volatility. A consumer downturn or cost pressures could reduce restaurant spend on technology, thereby impacting TOST’s performance.
Toast, Inc. Price and EPS Surprise
Decline in Gross Payment Volume or GPV per location is another problem, as it implies lower average transaction volumes. TOST’s overall GPV surged 22% year over year to $42 billion in the first quarter, but GPV per location declined 3% year over year. TOST added that it expects GPV per location to remain down in a similar range in the second quarter. Increasing costs and stiff competition remain additional concerns.
TOST Stock Outpaces Industry
TOST shares have gained 12.9% in the past six months, outperforming the Internet Software market and the Zacks Computer & Technology sector’s growth of 0.6% and 6.8%, respectively. The S&P 500 Composite has returned 2.5% over the same time frame.
Image Source: Zacks Investment Research
TOST has underperformed its peers (within the POS space) like Block XYZ and Lightspeed LSPD. Block and LSPD have lost 13.5% and 15.2%, respectively, while tech giant Oracle ORCL, which has a huge presence in the POS space, is up 42.4% over the same time.
TOST Trades at a Premium
TOST stock is also not so cheap, as its Value Style Score of F suggests a stretched valuation at this moment. TOST is quite expensive, with the stock trading at a premium with a price/book multiple of 13.89X compared with the industry’s 6.74X.
Image Source: Zacks Investment Research
Block, Lightspeed and Oracle are trading at a 12-month price/book multiple of 2.12X, 1.10X and 32.74X, respectively.
TOST’s Investment Considerations
Despite solid topline growth and strong momentum in subscription and fintech segments, Toast’s stretched valuation, declining GPV per location, and exposure to macro risks raise red flags. Weak consumer trends or spending cuts could directly pressure performance. Given these risks and limited near-term upside, investors could benefit from offloading TOST ahead of the second quarter results. Investors looking to invest should wait for a better entry point.
Zacks Names #1 Semiconductor Stock
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
See This Stock Now for Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Should You Hold or Sell TOST Stock Before Q2 Earnings Release?

Key Points
Nvidia and TSMC are two of the best ways to play the growth in AI infrastructure.
Meta Platforms and Toast are using AI to help drive growth.
GitLab is helping transform the software development lifecycle.
Investors looking for long-term winners should focus on companies with strong growth runways, clear competitive advantages, and the ability to adapt to evolving tech trends.
Let's look at five breakout growth stocks that fit this bill that you can buy now and hold for the long term.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
1. Nvidia
Nvidia (NASDAQ: NVDA) is the undisputed leader in artificial intelligence (AI) infrastructure. Its graphics processing units (GPUs) have become the backbone of AI workloads, and it's hard to overstate the company's dominance. It captured an incredible 92% market share in Q1, and even at a $4 trillion market cap, Nvidia is still in growth mode.
Its real moat isn't just its chips -- it's its CUDA software platform. CUDA is the main reason why the company is in the position it is in today. Nvidia pushed its free software platform into research labs and universities well before AI went mainstream. This led to developers being trained on CUDA, and tools and libraries being built on top of it that improve its chips' performance in handling AI tasks.
Nvidia, meanwhile, recently got good news when the Trump administration indicated it would once again let it sell its H20 chips in China. The company is also pushing into new markets beyond AI, with the auto segment being another potential huge market with the advent of autonomous driving and robotaxis. As such, Nvidia remains a great growth stock to own for the long haul.
2. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (NYSE: TSM) is the world's leading chip foundry, and its importance just keeps growing. Today, most advanced chipmakers just design chips, leaving their production to TSMC. That includes top names like Nvidia, AMD, Broadcom, and Apple.
TSMC is benefiting from the AI surge, with high-performance computing (HPC) now making up 60% of its revenue -- up from 52% a year ago. The company is far ahead in advanced node manufacturing, and that lead keeps widening. Nodes refer to how many transistors can be fit on a chip, and the more dense a chip is, the more powerful and energy efficient it becomes. Chips built on 7-nanometer and smaller nodes made up 74% of TSMC's revenue last quarter, with 3nm chips accounting for 24%.
With other foundries struggling, TSMC is the clear leader in the space due to its scale and technological expertise. As a result, it has been an invaluable partner to top chip designers. The great thing is that it doesn't matter which company takes market share, as they all use TSMC. With AI demand continuing to grow and new markets like autonomous driving emerging, TSMC looks like a cornerstone stock to own for the next decade.
3. Meta Platforms
One company looking to win the AI battle is Meta Platforms (NASDAQ: META). Meta already owns one of the most powerful digital ad platforms in the world, and it is now using AI to supercharge it. Meta's Llama models are helping boost engagement across Facebook and Instagram, which means users are spending more time on the apps, leading to more ad inventory to sell. At the same time, its AI tools are helping advertisers build better campaigns and target users more precisely, leading to higher ad prices and stronger return on ad spend.
But the biggest opportunities are still ahead. Meta is only just beginning to serve ads on WhatsApp and Threads. WhatsApp has more than 3 billion users, and Threads already has 350 million. Both are early in their ad rollouts, and that gives Meta a long runway for growth.
Meanwhile, CEO Mark Zuckerberg is spending aggressively to secure AI talent, with a stated goal of delivering "personal superintelligence." That's a bold vision, but if Meta succeeds, it could become the most important AI platform in the world. That's a reason to own it for the long term.
4. GitLab
GitLab (NASDAQ: GTLB) is transforming itself from a code repository into a full-blown software development lifecycle platform. Its platform now provides tools for planning, coding, testing, securing, deploying, and monitoring software, as it looks to become a single platform for the entire software development lifecycle. And it's doing this just as AI is fundamentally changing how code is written, tested, and deployed. Software development has been accelerating due to AI, and GitLab is becoming a key partner.
GitLab 18 marked a big leap forward, with over 30 new features including Duo Agent, which allows AI agents to help across the full development lifecycle. That matters, because only about 20% of a developer's time is spent actually writing code. GitLab is now focused on helping drive efficiency everywhere else.
In an AI-first software world, GitLab's position as an end-to-end workflow solution puts it in a strong spot. This looks like a strong growth story with a lot of upside potential in the years to come.
5. Toast
Toast (NYSE: TOST) is growing in importance in the restaurant industry, as its software platform helps restaurants manage operations and drive sales. Meanwhile, the company is now integrating AI into its platform in a way that could meaningfully change how restaurants make decisions.
Tools like ToastIQ and Sous Chef are helping restaurants make smarter, faster decisions in real time -- whether it's optimizing staffing, adjusting menus, or helping improve supply chains. It has even started piloting new modules to help restaurants upsell customers and improve their advertising with Google.
Toast's value proposition is clear: It helps restaurants run better and make more money. Meanwhile, through its payment processing, it benefits when its customers succeed. As restaurants face rising costs and tighter margins, they're turning to tech to help, and Toast is becoming one of the first places they look. That said, the restaurant industry is large and fragmented, giving Toast plenty of room to continue to expand over the next decade.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*
Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
Geoffrey Seiler has positions in GitLab and Toast. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, GitLab, Meta Platforms, Nvidia, Taiwan Semiconductor Manufacturing, and Toast. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

5 Breakout Growth Stocks You Can Buy and Hold for the Next Decade

Valuations are stretched, but is it a bubble? In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss that as well as:
The latest AI and energy news.
ASML's earnings.
A surprising report from Johnson & Johnson.
Alphabet's $25 billion data center and energy deals.
Bold predictions this earnings season
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
A full transcript is below.
Should you invest $1,000 in ASML right now?
Before you buy stock in ASML, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ASML wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $665,092!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,050,477!*
Now, it’s worth noting Stock Advisor’s total average return is 1,055% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of July 21, 2025
This podcast was recorded on July 16, 2025.
Travis Hoium: Is a market bubble farming right under our noses? Motley Fool Money starts now. I'm Travis Hoium, joined by longtime Fools, Lou the legend Whiteman, and from an undisclosed location somewhere in Europe, Rachel Warren. Today, we're going to get to ASML and Johnson & Johnson's earnings results, which came in overnight. Google's $25 billion energy deal. But first, are we in a market bubble? Lou, I remember Cloudflare trading for 100 times its sales at the peak of the market in 2021. The stock then fell 80% in six months. Today, Palantir is trading for 110 times sales. The stock is over $150 per share. Robinhood, 25 times sales at $100 per share. It looks like a bubble. It feels a little like a bubble. Are we in a bubble?
Lou Whiteman: Look, Travis, there's always a bubble somewhere. Valuations they look stretched. My go-to stat here is the S&P 500 is currently trading at 25 times earnings. That's well above the 20-year average, about 16 times earnings. That's frothy. I do think you need to keep that in mind. For example, I think Hidden Gems just sold down some of its position in Arista Networks based on high valuation. You keep that in mind. But here's the thing. Markets can remain at high valuations for a long time. I'm not running for the exits. I'm being selective. I'm looking for opportunities out there in areas like financial services and income stocks. I'm keeping that in mind, I'm adjusting as we go, but I also want to stay in the market.
Rachel Warren: I don't think I would say that we are in a stock market bubble, but I do think it's an important point to discuss. We're looking at valuations of a lot of tech companies right now, in particular. I think it's easy to be concerned that there might be a bubble forming. We've heard a lot of analysts make comparisons to the .com boom, of course. There's a lot of excitement that we're seeing in the tech base in particular, right now. This is being driven by the AI revolution, whether it's data center companies, chip companies, or software-based platforms like Palantir, as you mentioned, that are boosting their business with AI-driven services. This is where so much of the market seems to be focused. It's also a time where a lot of the modern pace of innovation is tracing back to right now. You look at a company like Robinhood. You've got the broader resurgence of interest in crypto that's benefited the platform. It's expansion into Europe, stock tokenization, and crypto futures. Those are just a few catalysts.
I will say, I think it creates a situation where many valuations are heightened, probably in some cases, for more than a given company's intrinsic worth. But I don't think that that valuation dynamic is true across the board. I think you can look at other industries where valuations are much more reasonable, find quality accessible businesses. For that reason, I don't think we're in a broad stock market bubble. But are valuations too high in some cases? I think that's the case. I think it's more important than ever for investors to be discerning when evaluating the intrinsic worth of companies, making sure it's the right fit for their personal portfolio, thinking about, where's your money? What is the true monetizable business here? Does it have those durable value-driven tailwinds for the company's growth? I think those are the questions that we have to ask ourselves as investors.
Travis Hoium: Sounds like the final answer is, we're probably in a bubble somewhere. We just don't know exactly where it is. I want to get to one of the companies that's involved in potentially inflating bubbles. That is Google and their latest AI news. We'll do that after a quick break.
Potential bubbles, let's turn to artificial intelligence, and Google announced $25 billion in data center and energy deals in the PJM, which manages electricity across 13 states from New Jersey to North Carolina, all the way over to Chicago. This comes on the heels of Energy's biggest inflation numbers in quite a while. 5.8% increase in electricity prices over the past 12 months. That was reported just yesterday. AI is an energy hog. We know that Rachel utilities have been a boring way to make money for decades, 1, 2, 3% growth. But does the recent change in artificial intelligence and the energy needs there, does that change anything? Does that change the way that you look at the utility space in any way?
Rachel Warren: For me, personally, I wouldn't say that this changes the trajectory of my investing interests in the energy space. I will say, it's not a space I gravitated toward. There are plenty of fellow fools who do. But if anything, as an alphabet investor, this makes me more excited about the investments this company is making that I think can help cement its continued leadership and strides in the AI space. In addition to that $25 billion data center and AI infrastructure investment, Google's also spending about $3 billion to modernize two hydropower plants in Pennsylvania, and that's designed to facilitate the power demand from AI and data centers in the area. One thing to bear in mind, PJM is the biggest electric grid in the nation. Its coverage area includes the world's largest data center market, that's located in Northern Virginia.
We're at a time where PJM and other providers are really struggling to keep up with rising electricity demand amid the AI boom. AI training, particularly for large language models and generative AI, it's incredibly energy intensive. A single generative AI query can require almost 10 times more electricity than a traditional Internet search. Data centers are already consuming a notable percentage of the nation's electricity. Unlike some other energy demands that can fluctuate, AI requires continuous operation. That means you need a constant power supply. That strains existing grid capacity. There was a meeting that just happened yesterday at Carnegie Mellon in Pittsburgh. We have the president, his cabinet, and executives from a range of companies, including Alphabet, were there. There was a report that the companies there, including, of course, Alphabet's Google, announced a combined total of $90 billion in investments in data centers, energy, and power infrastructure. From my perspective, that's the cost of doing business for these major providers. But if you are interested in the energy space, I think it creates some nice tailwinds there.
Travis Hoium: Lou, of course, Rachel mentioned the hydroelectric plants, and of course, Brookfield Asset Management was involved. They are the company that's behind a lot of electricity generation, not only in the US, but around the world, a lot of renewable energy. Is the investing takeaway here as simple as AI is a tide that is lifting all of these utility boats, and maybe we're going to lose the consumer overboard, or what are you taking away from?
Lou Whiteman: No, my investing takeaway is not by the utilities. I'm not there yet, but the invest takeaway for me is you said it, Travis. It's Brookfield. It's always Brookfield or something like that. Look, I think the demand for energy, that trend is real. It's a long-term tailwind, but I don't want to invest in individual utilities. I don't like to pick winners among geographies or projects. My way to take advantage of this trend is to buy into a company making investments all over the sector, giving me broad exposure instead of just an individual company. Look at the Brookfield Renewable Partners case. That's the actual entity that Google's partnering with here. Brookfield Renewable is going to bring on 8,000 megawatts of capacity in 2025 alone. I'm going to take my chances getting that broad exposure instead of focusing on any one individual company and hoping that they ride the wave, as well.
Travis Hoium: I think that's probably a smart way to look at it, and you get a nice dividend yield with a lot of those asset owners as well. Next up, we're going to talk about two of the big earnings reports of the day. We'll do that after this break.
ASML, which makes critical equipment for making chips, all the artificial intelligence chips, the chips that's probably in your smartphone today. This equipment costs as much as $400 million for a single piece of equipment. They reported earnings overnight, beat on the top and bottom line with 7.7 billion euros in revenue and 590 euros per share in earnings. But the stock is down 10% today because they were a little cautious about 2026, saying they couldn't confirm. It was going to be a growth year. Lou, what are you taking away from this earnings report?
Lou Whiteman: Worth saying that, like you said, these are really expensive machines. Even in the best of times, this is a company that's tough to judge quarter to quarter. You miss one delivery, and it can throw off the quarter. You're going to have lumpy. You throw in tariffs, trade wars, and chip restrictions to China, and I understand the caution. But I'm going to note here, CFO Roger Dyson attributed to this beat, this last quarter's beat to tariffs having "less negative impact than they anticipated." I think there's a real chance this trend can continue where the uncertainty is there, but it turns out not as bad as they thought because there's just so much demand out there, and if so, I think growth in 2026 can eventually be put back on the table, whether it comes or not for long term individual investors, the underlying growth story here, the need for more and more advanced chips and therefore, the need for more the machines that can make them. That's unchanged. I think Wall Street is overreacting today. I think this is still a great company with a great future up ahead.
Rachel Warren: What's interesting about this, Abi, as you noted, Travis, ASML, they beat on both the top and bottom line expectations. This was for their fiscal second quarter. Now, they gave guidance for the current quarter that missed expectations, and they warned that there might be the possibility of no growth in 2026. But it's not quite as bad as it appears at first glance. They forecast Q3 quarter revenue of between 7.4 billion euros and 7.9 billion euros at the upper end of that tier. I was just shy of the market expectations of about 8.3 billion euros for Q3. Taking a broader, more holistic look here, there are a lot of companies in the semiconductor industry that are facing similar headwinds as ASML is right now. There's a lot of uncertainty that's been created by the US tariff policy that remains the case. It's worth noting, management still expects their full year 2025 net sales to grow 15%, and they said that their AI customers' fundamentals are still looking really strong. Anything, management emphasized the continued uncertainty that's driven by macro headwinds, and that's a dynamic that competitors are contending with, too. They're preparing for growth in 2026.
But the reality that they and other adjacent players are facing right now in many ways. It goes back to external factors that they can't control. In my opinion, you've still got a quality business here. I think investors might need to moderate expectations. If macro headwinds shift in the short term, but I think the company is well-positioned to write those out.
Travis Hoium: Johnson & Johnson was the other big earnings report this morning. Stocks up 6% as we're recording. Rachel, this was another double beat. They said, they don't need to do deals out of desperation despite a Paden cliff. What were your takeaways from the report?
Rachel Warren: It was a fantastic quarter for the business. As you noted, a beat on both the top and bottom lines. They reported $23.7 billion in revenue. That beat estimates of 22.8 billion, adjusted earnings per share of $2.77. That was compared to analyst estimates of $2.70. That came with raised guidance for the year, as well, up 5.4%, at the midpoint. We had the chairman and CEO of the company say that their portfolio and pipeline is positioning them for elevated growth in the second half of the year with game-changing approvals and submissions and key disease verticals, including oncology, psoriasis, surgery, and cardiovascular, and they're looking to extend that as the year progresses. Broken down by segment, their innovative medicine segment, which is essentially their pharmaceutical business, grew 4.5% year over year. Their medical device business saw sales climb more than 7%. Those are fantastic figures for a company at this level of maturity. This is a business that I will note has been acquisitive in recent years. That goes back to everything from their acquisition of Abiomed several years ago, where they acquired the world's smallest heart pump from that acquisition.
They recently closed the purchase of intracellular therapies. That solidified their neuroscience portfolio. One important thing to note, this was something that CFO Joe Wolk addressed in a recent interview. They are facing patent pressures, particularly on some of their key older blockbuster drugs like Stelara. That's been a $10 billion-plus drug annually in recent years. But management thinks that, really, the expected gap in revenue from the generic competition is not going to have a noticeable impact on the company. That they're really well positioned to ride that out. Broadly speaking, going back to these recent acquisitions and their continued internal development pipeline. I will also say that management noted a revision in the impact of tariffs to 200 million. That was versus the 400 million that they were previously projecting. Now, there's still a lot of uncertainty about drug tariffs that is lingering, and something that their CFO said is, we're still really waiting to see what the administration shares in that regard. We're in an environment, of course, where there's a ton of uncertainty regarding tariffs and other cost pressures for businesses like this one. I will say this is one of the most well-bolstered companies in the pharma industry from a cash perspective. They're well-positioned to handle any headwinds that might come. They have an extensive domestic manufacturing presence that they are also looking to expand. This is also a company that has been paying and raising their dividend every single year for over six decades. It's a great company, in my opinion.
Travis Hoium: To end the show, I do want to get bold with some predictions here. Now, we are long-term investors, so a one-day drop in stock is maybe not that big a deal. It might even be opportunity. ASML is one of these companies wide moat. It's down after earnings, maybe an opportunity for those long-term investors. Now I'm thinking about opportunities like Netflix in the Quickstar days, Meta's drop when it was getting fit in 2022. What are the stocks that you're looking for a potential buy-the-dip stocks as we go through earning seasons, and maybe we have some short-term turbulence. Lou, let's start with you.
Lou Whiteman: The first name that comes to my mind is Mercado Libre. In part, because, look, given the markets, given the South American exposure, the wide range of businesses, there does tend to be volatility. There does tend to be dips. I think there could be opportunities. Look, for all of the growth that this company has delivered, crazy to think about, it's what, maybe one 20th the size of Amazon. It's a current position for me, and it's constantly on my radar.
Rachel Warren: One business I've been looking at recently is Toast. This has been a intriguing company to follow, particularly for me over the last 12-18 months. They really continue to expand the cohort of clients that they're onboard into their platform. They just booked Applebee's, which was their largest deal in company history. They added over 6,000 net new locations just in Q1 of 2025 alone, and they reached an annual recurring run rate that grew 31% year over year to about 1.7 billion as of the end of March. It's a sticky business. It resonates with a lot of small, medium-sized restaurant chains. But also some of these larger companies that are starting to see the value in Toast's platform. They're looking outside the restaurant space, too, convenience stores, companies like Top Golf, or more recent Partners for them. I think there's a lot to like about this business. I'm also quite impressed by their more recent profitability. It's one that I'd be curious to take a closer look at. They happen to go down that mark.
Travis Hoium: Thank you to Lou and Rachel for joining me today. As always, people on the program may have interest in the stocks that they talk about in the Motley Fool, may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial guidelines and is not approved by advertisers, are sponsored content, and provided for informational purposes only to see our full advertising disclosure, please check our show notes. For Lou Whiteman and Rachel Warren, and the entire Motley Fool team, I'm Travis Hoium. We'll see you tomorrow.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, 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. Lou Whiteman has positions in ASML, Cloudflare, and MercadoLibre. Rachel Warren has positions in Alphabet, Amazon, and Johnson & Johnson. Travis Hoium has positions in Alphabet, Cloudflare, MercadoLibre, and Robinhood Markets. The Motley Fool has positions in and recommends ASML, Alphabet, Amazon, Arista Networks, Cloudflare, MercadoLibre, Netflix, Palantir Technologies, and Toast. The Motley Fool recommends Brookfield Asset Management, Brookfield Renewable Partners, and Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.