A Self-Invested Personal Pension (SIPP) is one of the best ways to build wealth for retirement. Even more so than gold, in my opinion. That may seem like a foolish statement, given the price of the shiny yellow metal has recently broken through the $3,000 per ounce price tag.

The last 12 months have been a phenomenal year to hold this commodity, with gold prices up almost 43%. And yet, when looking at the long-term performance, the average annualised return of gold is still only 4.7%.

That’s better than most savings accounts right now. But it pales in comparison to what the stock market can and has offered for decades. And for investors with a long time horizon, capitalising on stock market opportunities in a SIPP could be the key to a wealthier retirement.

Leveraging tax relief

A key advantage unique to a SIPP is the tax relief it provides. Whenever money is deposited into this account, the funds have already been taxed. But, since SIPPs have the same tax benefits as employer pension plans, investors receive a tax refund on par with their income tax bracket.

For example, let’s say an investor is paying the Basic rate of 20%, and they’ve just deposited £1,000 into their SIPP. After tax relief, they actually end up with £1,250 of capital to invest.

Suppose a SIPP portfolio were to match the stock market’s historical average return of 8% for 25 years. In that case, investing £1,000 each month would build a nest egg worth just shy of £1.2m. By comparison, at gold’s 4.7% average return, this milestone would take approximately 33 years to hit.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Exploring alternatives

What if there was a way to capitalise on the rise of gold while having the return characteristics of the stock market? That’s actually possible by directly investing in gold mining enterprises. And one of the biggest in the world is Fresnillo (LSE:FRES).

Following the recent surge in gold prices due to geopolitical and trade uncertainty, the Mexican mining enterprise has enjoyed a massive boost to its revenue and earnings. In fact, the company just reported its highest-ever cash profit of $1.55bn, translating into a record $547.5m dividend paid out.

Subsequently, Fresnillo shares more than doubled the performance of gold prices, rising by over 100% compared to 43%. And with various projects in development to further expand its production capacity, the stock looks set to continue outperforming in the future.

Of course, with higher return potential comes greater risk. The political environment in Mexico isn’t entirely mining-friendly, with a proposed ban for open pit mining circulating in the Mexican Congress.

If such a bill were to be passed into law, Fresnillo’s future growth potential could be in jeopardy. And just as the stock surged, it could just as easily come crashing down – a risk I’m personally not willing to take.

The bottom line

While gold may not be the greatest wealth-building asset class historically, it still serves as a robust hedge against inflation. That makes it an ideal choice for investors seeking to protect their wealth. And with gold exchange-traded funds, it’s possible to hold the commodity within a SIPP.

However, for investors seeking to build wealth, considering an investment in quality companies may be the superior strategy.

The new tax year is coming up shortly, which means it’s time for me to add fresh cash to my Stocks and Shares ISA. As it offers tax-free dividends and no capital gains taxes, I try to maximise my allowance.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

This year I’ll focus on UK shares that could one day provide a juicy passive income. Unlike many US growth shares that are experiencing a shaky start to the year, several UK dividend shares are in demand.

As an example, shares in UK banking giant Lloyds Group are up by 45% over the past year and 25% year to date.

Despite recent strength in many FTSE 100 shares, I think there’s more to come.

Crunching the numbers

Before I discuss which shares I’m focusing on, let’s crunch some numbers. I certainly wouldn’t be able to earn more than £7k in passive income from one £20k investment as that would be a 40% return. Not without far greater risks anyway.

But by consistently filling my annual Stocks and Shares ISA, and investing over five years, I expect to build a much larger pot. Given a 10% annual growth rate, I calculate I can reach an ISA worth £122,102.

Then, to achieve £7,326 of annual passive income, I’ll need to earn a 6% dividend yield. I think this sounds achievable, given so many FTSE shares offer such a yield.

I have to bear in mind that neither the 10% annual growth rate nor the 6% dividend yield are guaranteed. However, I do think they are reasonable assumptions. In fact, many of the FTSE dividend shares that I’m thinking of have decades of consistent dividend history.

Dividend shares for my ISA

For my new ISA, I’m consider a selection of these quality dividend shares. That way, I won’t be putting all my eggs in one basket.

My top dividend pick right now is Aviva (LSE:AV.). This insurer is focusing on capital-light growth and it seems to be working. It recently expressed how it has clear trading momentum that’s generating strong and reliable growth.

Operating profit climbed 20% to £1.8bn, ahead of market expectations.

The proposed purchase of Direct Line should add further capital-light profits. This acquisition is expected to complete by the middle of this year.

This all bodes well for Aviva’s dividends. It has a multi-decade history of distributing cash to shareholders in the form of dividends. It currently offers a 7% dividend yield, and it has typically averaged around this level over the past five years.

Something to bear in mind

Note that dividends aren’t guaranteed and payments can be cut or suspended, as we saw in 2020. Also, bear in mind that Aviva’s investment returns could be affected by economic downturns.

That said, insurance premiums provide resilience, and these cash flows underpin sustained dividends. So, it’s encouraging that premiums gained 14% year-on-year to £12bn.

In addition to Aviva, I also like HSBC, BP, and Schroders. All three of offer a 6% yield and long dividend histories, and are all established businesses.

If I’m able to add a fresh £20k to my new ISA this year, I’ll split my pot equally between these four dividend shares. But note that they will form part of a more diversified portfolio.

Phoenix Group (LSE:PHNX) has (in my opinion) proved to be one of the FTSE 100‘s best dividend shares in recent times.

Earnings have been up and down due to various challenges affecting the financial services market. Even so, a strong balance sheet has enabled the company to keep raising shareholder payouts since 2016.

This included a 2.6% year-on-year increase in 2024, to 54p per share. And City analysts expect dividends to keep rising over the next couple of years at least:

Year	Dividend per share	Dividend growth	Dividend yield
2025	55.77p	3.3%	9.8%
2026	57.47p	3.1%	10%

Recent share price strength has eroded the dividend yield on Phoenix shares. But with readings in and around 10% through to 2026, they are still among the highest currently available on the Footsie.

Yet it’s important to remember that dividends are never, ever guaranteed. What’s more, broker projections can often miss the mark if economic conditions worsen or balance sheets become stretched.

So how realistic are current dividend estimates? And should I buy Phoenix shares for my portfolio?

Dividend cover

The first thing I’ll look at is dividend cover. This is the simplest way to assess a share’s dividend prospects, by considering how well predicted dividends are covered by anticipated earnings.

This is especially important for companies that operate in cyclical sectors like financial services. A reading of two times or above is said to provide a wide margin of safety should profits get blown off course for any reason.

Unfortunately, Phoenix scores pretty poorly on this metric. In fact, the expected dividend for 2025 barely matches projected earnings of 55.98p per share.

Things improve for 2026, but expected earnings of 63.14p mean dividend cover is just 1.1 times.

Balance sheet

However, it’s also critical to note that weak dividend cover is a constant at Phoenix. In fact, this is a common theme among financial services companies: maintaining capital buffers and navigating investment volatility can substantially impact earnings.

I believe Phoenix’s balance sheet is a better indicator of its ability to meet dividend projections. And on this basis, things are looking pretty good for investors.

At the end of 2024, its Solvency II shareholder capital coverage ratio was an impressive 172% and roughly in line with the 176% recorded a year earlier.

This represents Phoenix’s ability to create impressive amounts of cash. Last year, total cash generation was £1.8bn, sailing above its own forecasts of £1.4bn-£1.5bn. Accordingly, the business now expects to report total cash generation of £5.1bn between 2024 and 2026, up £700m from previous targets.

A stock to buy?

With the company’s Solvency II ratio also well above its target range of 140% to 180%, I believe the company’s in great shape to meet current dividend forecasts through to 2026.

So does this make Phoenix shares a no-brainer buy? Not necessarily, as a deterioration in trading conditions and subsequent share price fall could offset the benefit of big and growing dividends.

Yet, it’s still my opinion that Phoenix shares are worth serious consideration. I expect earnings to grow strongly during the long term, driven by rapid population ageing in its markets and the rising importance in financial planning. Consequently I’m also predicting the business to keep delivering a large and growing dividend over time.

I’m thinking I might use some of my new Stocks and Shares ISA contribution limit for penny shares. These ultra-affordable stocks are typically priced at less than £1 with the companies valued at under £100m.

Lower prices tend to lead to bigger spreads between buying and selling prices. And that can mean we need a bigger rise to break even. And I try to keep away from companies that are too small, as they so often seem able to go bust in the blink of an eye.

Back to growth?

I took my eye off Staffline (LSE: STAF) and missed a year-to-date gain of 40%+ so far in 2025. A trading update on 4 February revealed a 12.8% rise in full-year revenue, with underlying operating profit up 7.8% to £11.1m.

In what might be key to recovery, the recruitment and training company reported net cash of £3.3m at 31 December, compared to £0.7m of debt a year previously.

The big share price jump came from a disposal announcement on 25 February. The company sold its PeoplePlus subsidiary for £12m in cash (including £2m in deferred consideration). It’s subject to “a deduction of £5.1m of advanced payments received in respect of future revenue”. But the whole deal is expected to add another £6.9m to Staffline’s cash pile.

The main risk I see is that analysts still expect a loss per share for 2024. And the profit they’ve pencilled in for 2025 would mean a price-to-earnings (P/E) ratio of 11. That doesn’t leave a lot for safety. But it might just mark the start of sustained growth.

Full-year results are due on 8 April, and I’ll be watching.

Ready to take off?

I keep coming back to Helium One Global (LSE: HE1) and thinking it could be huge success. Or that it could be a spectacular fail.

It depends mainly on the company’s helium project in Tanzania, with that rare gas being short in supply and high in demand.

So far, the company has a mining licence offer, but there’s further approvals process still to come. It’s been slow progress, and the shares have crashed heavily from the high peaks of 2021.

That often happens with a new start-up that isn’t in profit yet. I often expect to see an early boom and bust before I risk any cash. And if first profits really are finally coming into view, I reckon there could be solid potential here.

But over the past few years, Helium One’s been issuing more and more shares to raise the cash it needs. The share count’s mushroomed 12-fold. And if it needs more money, existing shareholders could be diluted even more.

It’s good to see institutional investors including aberdeen and Barclays owning around half the company. But with the market-cap at £64m, it’s relatively small beer for them.

I’m really on the fence with this one, but it’s on the list.

Every Stocks and Sharers ISA portfolio has a few weeds in it. It comes with the territory. But these two stocks from the healthcare sector are sticking out like a pair of sore thumbs in mine.

A falling knife

Let’s start with Moderna (NASDAQ: MRNA). I first bought the shares in 2022 after they’d dropped 50%, then doubled down at the start of 2024 when they dipped below $90.

Now they’re at $32 after falling 20% year to date.

Now, I didn’t go in totally blind about Covid vaccine sales. I knew they’d fall once everyone got back to normality. I still remember how groggy I was after my first pair of jabs, and I’m not overly keen to feel like that again.

However, I thought sales would prove durable enough to see the biotech firm through to the next (more exciting) phase of its development. That would involve a new class of mRNA medicines for heart disease, cancer, HIV, and more.

The worst of both worlds has happened — Covid sales have fallen off a cliff and no blockbuster has yet been developed to take their place. Revenue has gone from $19bn in 2022 to an expected $1.5bn-$2.5bn this year. That wide range tells us that demand is very uncertain.

Something I didn’t foresee was the election of Donald Trump and the subsequent appointment of vaccine sceptic Robert F Kennedy Jr as health secretary. mRNA vaccine technology appears to be directly in the administration’s firing line, so this is adding more risk.

Of course, politics is outside Moderna’s control. It had its second product — for respiratory syncytial virus (RSV) in adults aged 60 and above — approved last year, but it hasn’t been selling well.

Nevertheless, the company has ambitious plans to launch 10 products by 2027. And its potentially groundbreaking personalised cancer vaccine is currently in a Phase 2/3 trial for melanoma in collaboration with Merck.

Losses are expected for years, but Moderna did still have $9.5bn in cash at the end of 2024. It’s in no immediate danger.

I’m going to hang onto my shares and ride out the vaccine-related political storm. But it’s a long way back from $32.

Weight-loss woes

The second stock stinking out my ISA is Novo Nordisk (NYSE: NVO). It’s down 10% in 2025 and 38% over the past six months.

Novo Nordisk is a diabetes care giant that’s also behind the blockbuster GLP-1 drugs Ozempic and Wegovy. These have been selling like hotcakes, but a recent phase 3 trial to find a significantly better weight-loss treatment fell short.

Meanwhile, competition is heating up from weight-loss rival Eli Lilly, while Roche is attempting to muscle its way into this lucrative space. So rising competition is a risk worth monitoring.

Unlike Moderna though, I’m confident this stock will bounce back. Novo has high margins, strong R&D investment, and a powerful market position with Ozempic and Wegovy.

Indeed, surveys show that many patients specifically request these by name, rather than asking about ‘GLP-1 drugs’ generally. The firm recently launched a direct-to-consumer platform that allows eligible patients to purchase Wegovy online for $499 per month.

Finally, the stock is trading at an attractive 19 times forward earnings, while offering a 2.1% dividend. I’m more likely to buy additional shares than sell at that valuation.

Tesla (NASDAQ: TSLA) has long been the ultimate Marmite stock. Whether you loved or hated it, though, you often couldn’t ignore it.

But the polarisation has now spread to the brand itself and CEO Elon Musk specifically. Even long-time Tesla bulls are worried. For example, Dan Ives, managing director at Wedbush Securities, says the electric vehicle (EV) maker is facing a “brand tornado crisis moment”. 

The Tesla share price is down 50% in three months. But investors who bought previous dips like this have been rewarded handsomely.

Despite the drop, the stock is still up 728% from a Covid-crash low five years ago.

Let’s ask the bot

But I’m torn on whether this situation is different. I suspect it might be, but writing Tesla off in the past has been a mistake.

For a little assistance then, I turned to artificial intelligence (AI) in the form of ChatGPT Plus. I asked it if the share price is doomed, or if this is a potential dip-buying opportunity for my portfolio.

Here’s what it said.

No joke

The chatbot immediately put my fears at ease, saying the stock is not “necessarily doomed“. But Tesla is facing a drop in deliveries amid weakening demand.

The bot also asserted that competition is “no joke“, highlighting EV rivals like Rivian, Nio, and BYD. I don’t see Nio or Rivian as real threats, but BYD certainly is. The Chinese firm has ultra-low production costs and is selling quality EVs for $10,000 in China, where it also dominates with plug-in hybrids.

BYD will soon be selling its popular Seagull EV in the UK — renamed Dolphin Surf — and will reportedly cost less than £20,000. It already has other EV models out in the UK and is exporting aggressively to Europe, Southeast Asia, and Latin America.

Recently, BYD announced its Super e-Platform, a charging technology that it says can add around 250 miles of range in just five minutes. Musk warned about innovative Chinese competition last year.

If there are no trade barriers established, [Chinese car companies] will pretty much demolish most other car companies in the world. They’re extremely good.

Elon Musk.

Elon factor

My artificial assistant also pointed out that Musk is a “wildcard” that adds volatility risk. That’s true alright. The unorthodox persona was once an asset, but might now be a liability.

As has been widely reported, some Tesla vehicles, charging locations, and showrooms have been attacked in the US. However, I recently parked near a row of Teslas at a UK Supercharger site and nothing was ablaze. I’ve seen none daubed in graffiti.

It’s hard to know yet the true scale of any brand damage. We’ll find out more in early April when Tesla announces Q1 vehicle deliveries.

My decision

ChatGPT reminded me that Tesla is about more than just EVs. There is energy storage today and possibly robotics and vehicle autonomy tomorrow. If just one of those bets pays off, the bot declared, today’s price could look like a bargain. Indeed.

As for valuation, it said the stock is “still pricey relative to legacy automakers“. That’s an understatement — the price-to-earnings ratio is currently above 100!

Weighing things up (myself), there is too much uncertainty here for me to invest.

A darling of the high street, Greggs (LSE:GRG) shares have rocketed since its 1984 IPO, soaring over 3,000%. There’s been more turbulence over the past five years, with peaks and troughs in that time.

Still popular among investors today, five of Fool.co.uk’s free-site writers have put forward alternative British-based stocks for investors to consider…

AG Barr

What it Does: AG Barr is a drinks company. It’s best known for Irn Bru, but has recently acquired Boost! product range.

By Stephen Wright. The AG Barr (LSE:BAG) share price has been up and down recently. But when it’s down – ideally somewhere near the 600p mark – I like it a lot better than I like Greggs shares.

Put simply, I think I can see better growth prospects for the maker of Irn Bru than I can for the business that sells sausage rolls. The key is its recent acquisition of Boost Holdings.

AG Barr has been working to integrate the business over the last couple of years. And I expect the expansion in margins that has already begun to carry on from here.

With Greggs, I think the future is less clear. Recent growth has been largely driven by new store openings and I’m uncertain as to how long this can continue. 

Inflation is a risk for AG Barr – higher packaging costs creates a challenge for expanding margins. But from an investment perspective I prefer it to Greggs at the moment.

Stephen Wright does not own shares in any company mentioned.

Associated British Foods

What it does: Associated British Foods is a highly diversified group, with a range of food, ingredients and retail businesses.

By Andrew Mackie. Greggs might have carved itself a unique position on the high street, but I much prefer FTSE 100 stalwart Associated British Foods (LSE: ABF). And believe it or not, it also has a bakery division, through its leading Kingsmill brand.

The beauty about the company is its unique diversified business model. Most individuals associate it with just retail, through its ownership of Primark. But its way more than that. A motley collection of different businesses makes it extremely resilient during the course of the business cycle.

At the moment, the high street is struggling. Primark isn’t immune to that. Consumers are cautious with shrinking disposable incomes. But unlike one trick pony Greggs, revenues have been increasing in its ingredients segment, which include speciality enzymes used in manufacturing and pharmaceuticals.

I accept that its share price has hardly been a star performer measured over years. But viewed over 20 plus years, it’s been a multi-bagger. And that doesn’t include the handsome dividends along the way. I have been a part owner for years, and will be for many more to come.

Andrew Mackie owns shares in ABF.

Barclays

What it does: Barclays is a well-known Tier 1 bank, serving both private and corporate clients across the world.

By James Beard. Although I’m a fan of Greggs, I believe the baker’s scope for future growth is limited, primarily due to its 100% domestic focus.

I prefer Barclays (LSE:BARC), which earns 48% of its revenue from outside the UK. Its global reach helped increase the group’s 2024 post-tax earnings by 19.4%.

I also think the global demand for banking services is likely to outstrip that for pies and sausage rolls.

However, banking stocks can be volatile. And (unlike me) Barclays’ directors seem to prefer share buybacks to dividends. Its sub-3% yield is a little disappointing.

But the bank’s targeting an increase in its return on capital from 10.5% (2024), to 12% (2026). Also, analysts are forecasting a 42% rise in earnings per share over the same period. With a forward price-to-earnings ratio of around six, the stock looks cheap to me.

For these reasons, I’m happy to have Barclays in my portfolio.

James Beard owns shares in Barclays.

Coca Cola HBC

What it does: Coca Cola HBC is a bottling partner for Coca-Cola, producing and selling drinks across 28 markets in Europe, Africa, and Eurasia.

By Ben McPoland. While Greggs has a strong brand and position in the UK, it only operates on these shores. Therefore, it’s fully exposed to the UK economy, which is beset by low growth and high inflation.

In contrast, Coca Cola HBC (LSE: CCH) from the FTSE 100 operates in various international countries, selling brands like Coca-Cola, Fanta, Schweppes, Sprite, and Monster.

These markets include established ones like Greece, developing economies such as Poland, and emerging markets like Nigeria and Egypt. In my eyes then, the company has higher future growth potential than Greggs.

In 2024, organic net sales rose 13.8% year on year to €10.7bn, while organic operating profit was up 12.2% to €1.2bn. The dividend was hiked 11% to €1.03 per share, with the well-covered forward yield sitting at 2.9%.

A spike in inflation is a risk, as this could see people downtrading from branded drinks. A boycott of US brands from Muslim consumers in Egypt and Bosnia is also worth watching.

Long term however, I think this reasonably-priced stock will continue to do well (it’s up 35% in a year, as I type).

Ben McPoland owns shares in Greggs and Coca Cola HBC.

TP ICAP

What it does: TP ICAP is a global interdealer broker that facilitates trades in financial, energy, and commodities markets.

By Mark Hartley. TP ICAP (LSE: TCAP) acts as an intermediary between financial institutions, such as investment banks and hedge funds. It helps organisations execute transactions in products like bonds, derivatives, foreign exchange and commodities.

It generates revenue primarily through commissions on trades, leveraging market volatility to its benefit. Consequently, revenue declines during periods of low trading volume, which can hurt the share price. It’s also at the whim of increasingly strict financial regulations, which could lead to costly business adaptations and revenue loss.

To meet this demand, it’s recently expanded into electronic and data-driven services, making it better positioned to benefit from evolving financial markets. Financial services is the largest industry in London and one of the fastest growing in the UK. For TP ICAP, the results are already evident, with the share price up solidly44% in the past year. It also pays a handsome dividend with a yield of 5.7%.

Mark David Hartley owns shares in TP ICAP.

Warren Buffett is a legendary investor and a lot of his moves make perfect sense. What about his position on Apple (NASDAQ: AAPL), though? The Apple share price has moved up a quarter over the past year (and more than tripled over five years).

Buffett’s offloaded billions of pounds’ worth of Apple shares in recent years – but he’s also hung onto billions of pounds’ worth.

If he reckons Apple’s overvalued, why hasn’t he sold the lot? If he thinks the price is good enough to justify Apple still being his largest holding, why sell any at all?

I don’t know, frankly: only Buffett does. Maybe it’s for tax reasons. Maybe Buffett just wants to keep his portfolio diversified after the Apple share price soared.

But while I can’t read the Sage of Omaha’s mind, the soaring cost of the tech company’s stock has got me scratching my head.

Apple may be close to a perfect business

In some ways, Apple has a lot of the elements one would look for in a brilliant investment.

That’s why I’ve held it in the past and would gladly own the shares again if I could buy them at an attractive price. After all, a brilliant investment requires (to paraphrase Buffett) buying into a great company at an attractive price.

The firm’s area of operations is extensive. Sure, it sells phones and computers, tablets and watches. But it also makes a lot of money selling services. It has a booming financial services operation too.

Thanks to a strong brand, installed user base, proprietary technology, and the hassle involved with switching to rivals, Apple has serious pricing power.

Last year, it reported a net income of $94bn. Not only is that a huge sum, but it equates to a net profit margin of 24%. That’s what pricing power can do!

Here’s why I’m not buying now

Those wonderful economics help explain why the Apple share price has soared over the past five years (and beyond: its performance has been excellent over several decades).

But it also means I need to ask, as someone who’d be happy to own Apple shares: is the price I’d need to pay for them today a sensible one?

After all, as an investor, I aim to buy shares for less (ideally much less) than I think they’ll ultimately turn out to be worth.

But Apple, with its $3.2trn market capitalisation, now has a share price-to-earnings ratio of 34.

For me, that’s too high to justify, so I have no plans to buy Apple again at the current price.

Buffett talks about an investor having a “margin of safety” and I don’t see that in the current price. After all, the company faces growing competition from low-cost rivals.

I am also not convinced that the money it’s been pouring into its streaming business is likely to produce anything like the return on capital it’s achieved in other parts of its sprawling empire.

Not too many years ago, people used to queue outside the shops to get their hands on the latest Apple iPhone. These days the razzmatazz associated with a new release has become the exclusive domain of Nvidia (NASDAQ: NVDA). But unlike previous new chip launches, the stock price didn’t surge after Nvidia’s latest debut. The question now is whether it can get its mojo back.

Super Bowl of AI

Last Tuesday (18 March), at a packed developer conference in Silicon Valley, Jensen Huang unveiled a new line of chips. Dubbed the Rubin, so named after the astronomer who discovered dark matter, the AI superchip will be up to 14 times more powerful than the Blackwell.

His strategy is obvious. Despite the threat brought on by the release of DeepSeek, he very much sees more computational power as the future of AI. Indeed, he claimed that the world will need 100 times as much computing power than was envisaged just a year ago.

Echoes of the past

I’m very much a firmer believer that one can learn a lot from how previous technological breakthroughs shaped the development of an industry.

Back in the 1970s, mainframe computing was king, and IBM was at the centre of that universe. With the invention of the PC in the early 80s, the company failed to appreciate its threat. It even described them as an “entry system”. The expectation was that anyone buying a PC would move up to more powerful mainframe computers.

Doubling down

IBMs motto back in the day was ‘Think!’. Think, yes; but not like a bunch of clones. In the face of the threat posed by the emergence of the PC, the company doubled down, sinking even more money into main frame computing.

As computers became commodities, the company’s margins eventually collapsed, and it nearly went bankrupt. Even the great Warren Buffett was invested in IBM and got burnt. Maybe that explains why he has stayed away from the hype surrounding Nvidia.

Future of AI

I am not trying to make any direct comparisons between then and now. What I am cautioning investors to do is to stop and think.

DeepSeek has changed the narrative around AI, of that there is no doubt. OpenAI, by far the most popular and widely used large language model (LLM) has effectively been commoditised. That includes its reasoning model, o1.

DeepSeek may fade in obscurity. But that doesn’t matter. What they have shown is that you don’t need the latest and greatest chips, which only Nvidia has, to make a workable LLM.

It’s not just Nvidia that is equating greater power with better. The hyperscalers are too. Last month, the Wall Street Journal reported that Microsoft’s total capital expenditure in 2025 would top $90bn. Meta has already committed $65bn this year. These are truly eye watering sums of money.

To me, it feels like the entire tech industry is stuck in a delusional epoch. How the AI industry evolves in the years ahead is anyone’s guess. If these bets spectacularly backfire, then the tech giants of today could suffer the same fate as the dinosaurs did 65m years ago. Therefore, until I see a clear path for the AI industry, I won’t be investing in Nvidia.

The Greggs (LSE:GRG) share price has made an awful start to the year. Only months ago, the stock was breezily changing hands above £31. Today, it’s trading below £18 as the business battles a plethora of challenges.

So, does the FTSE 250 sausage roll retailer now offer a cheap investment opportunity? Or have Greggs shares become a stale value trap to avoid?

Let’s explore.

A bitter taste

At first glance, the collapse in the Greggs share price might appear unwarranted. Revenue passed £2bn for the first time last year and pre-tax profit rose 8.4% to reach £204m. Those appear to be solid numbers, so what on earth’s going on?

Well, the stock market’s often described as forward-looking. Essentially, past results are yesterday’s story. What truly matters are the clues they can provide investors about a firm’s future growth trajectory. On this front, there are multiple headaches for Greggs shareholders.

Like-for-like sales growth has slowed to a snail’s pace, inching just 1.7% higher in the first nine weeks of 2025. The company cited “challenging weather conditions” in January as a factor behind the deceleration. It’s rarely a good sign when a firm’s reaching to blame the British winter for an underwhelming performance.

In addition, the Newcastle-based business warned that margins could be compressed in 2026 and 2027, impacted by investments in manufacturing, logistics, and distribution. To compound difficulties, increases to the National Living Wage and a rise in employer’s National Insurance contributions add inflationary pressure, which could hurt the bottom line.

Fundamentally, it seems the wind has been taken out of the firm’s sails. The Greggs share price has historically enjoyed strong positive momentum, propelled by rapid growth across several metrics. In the cutthroat food-to-go market, the company can ill afford to take a breather while competitors snap at its heels.

Silver linings

Although things may seem gloomy for Greggs, there are countervailing reasons to be optimistic. Patient investors may still be rewarded given the board remains bullish that it can return to its previous growth trajectory in the long term, even if it takes a few years.

Plus, there was a saving grace for investors who prioritise passive income. The group’s boosted its full-year dividend by 11% to 69p per share. Dividends are well covered at two times anticipated earnings, providing shareholders with a decent margin of safety.

From a valuation perspective, the Greggs share price also looks more attractive today. The forward price-to-earnings (P/E) ratio has reduced considerably relative to the stock’s historical average. Trading at a multiple of 13 times forward earnings, there’s a credible case to be made that the shares are cheap today.

Finally, ambitious long-term expansion plans to operate more than 3,000 UK outlets indicate that there could still be room for further growth. In 2024, the business celebrated opening its 2,600th shop and it aims to deliver 140 to 150 new stores this year.

My take

I’ve been impressed with Greggs’ business in the past, but the latest results have given me pause for thought. Although the stock looks cheap today, I’m reluctant to invest until I see concrete evidence that the firm can return to its glory days. Overall, I see better investment opportunities elsewhere.