S&P 500 Rises Despite Trade Policy Reversals; Promising Discount Stocks Identified
In recent weeks, the S&P 500 index has made a notable recovery, largely due to ups and downs in tariff and trade policies and strong corporate earnings from leading companies. Currently, the benchmark index is nearly flat for 2025’s trading period. This is remarkable, especially after significant sell-offs earlier this year that nearly put the market into bear territory.
While several stocks have rebounded to new highs or approached their previous peaks, many other promising stocks are still available at considerable discounts. For investors looking for strong long-term options, two contributors from Motley Fool have highlighted stocks they believe could deliver substantial returns.
Where to invest $1,000 right now? Our analyst team has identified the 10 best stocks to buy at this moment. Learn More »
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AI Market: Second Place Can Still Bring Major Returns
Keith Noonan: The surge of interest in artificial intelligence (AI) has allowed Advanced Micro Devices (NASDAQ: AMD) to reach an all-time high in March 2024. However, since then, disappointing sales growth and margins for its AI processors have caused shares to drop by 46%. Nonetheless, there is potential for AMD to thrive in the AI space and reward patient investors.
Currently, Nvidia holds a dominant position in high-end AI processing hardware, with its CUDA software platform serving as the industry standard for developing AI models. While AMD faces challenges in overtaking Nvidia at the cutting edge, it doesn’t need to lead the market to achieve robust returns.
In its Q1 earnings report, AMD revealed a gross margin of 50%, an increase from 47% in the previous year. This improvement was driven by the rising contributions from data center processors. Nvidia, by comparison, reported a gross margin of 78.4%. Although AMD may not see such high margins soon, investors should focus on its long-term growth potential.
Considering the growth trajectory of the AI processor market, there appears to be room for multiple competitors. As AI models advance, the processing power required may decrease, paving the way for AMD to secure a profitable position even without being the top player in the market.
PTC Stock: A Strategic Buy on the Dip
Lee Samaha: Shares of industrial software company PTC (NASDAQ: PTC) have declined by 8% this year and are down 16% from their peak. This downturn is primarily due to challenging market conditions, but it doesn’t diminish the company’s strong fundamentals or its potential for future growth in annual run rate (ARR) of active subscriptions and contracts, as well as free cash flow (FCF).
PTC’s software for computer-aided design (CAD) and product lifecycle management (PLM) is central to the digitization of manufacturing, a trend that will only strengthen with advancements in AI and digital transformation efforts. Despite current economic uncertainties causing clients to be cautious, the company maintains its core value proposition.
Recently, PTC revised its ARR growth forecast for 2025 down from 9-10% to 7-9%. While this is not positive news, the management also raised the full-year FCF guidance to between $840 million and $850 million, up from previous estimates. This is a promising sign given the company’s strong performance in the early part of the year.
However, the increased costs associated with realigning sales and marketing operations have impacted the company’s FCF, which is expected to be negatively affected by $19 million. Adjusting for this cost, the underlying FCF is projected at $864 million, suggesting PTC trades at an attractive multiple of 22 times FCF in 2025—a compelling scenario for a company growing its ARR and FCF robustly.
These metrics will appear even more favorable if trade tensions start to ease.
Is Advanced Micro Devices a Smart $1,000 Investment Now?
Before making an investment in Stock in Advanced Micro Devices, consider this:
The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks currently available, and Advanced Micro Devices is not one of them. The top stocks listed hold potential for significant future returns.
For instance, if you had invested $1,000 in Netflix when it made this list on December 17, 2004, you would now have $642,582! Similarly, if you had invested in Nvidia when it entered the list on April 15, 2005, you’d have $829,879!
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*Stock Advisor returns as of May 19, 2025
Keith Noonan and Lee Samaha have no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Advanced Micro Devices and Nvidia and also recommends PTC. The Motley Fool follows a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
