Transcription
We've got X amount of data centers; we need 10 times that amount. New data center deals sealed this week are sending many AI stocks on a major rebound. The stock price has surged like 50% in the last couple of days. The new outlook has analysts raising guidance on several AI giants. We're looking like a 50% or more gain in Nvidia stock potentially by the end of the year. Market Beats Thomas Hughes breaks down four AI infrastructure stocks that are surging this week. The business is strong; it's robust. These new deals have really amplified the outlook. The final pick in his list is a well-known company you might not associate with AI. Rolling with the times, shifting from legacy into the new AI future. Could this AI rebound just be getting started? Let's dive in.
Thomas, so great to have you back on the channel today talking about this big rebound that's happening in some of the biggest AI names out there. Before we get into these four specific companies that are seeing a huge, skyrocketing rebound this week, let's just talk about what's behind the bounce. Why are so many AI companies seeing some positive trends this week? Well, I, I think it's because we're having a big shift in macroeconomic conditions and outlook. We had been in this state of maximum fear, worst-case scenario for all these stocks, and now we're kind of shifting to what's almost the best-case scenario for them. Where before it was tariffs and China restrictions impacting the outlook for revenue and earnings, but now we had some new deals and some new tailwinds emerging. The tariff, um, issue is still present, but it's not quite as upfront as it was before. But also some deals with, uh, with Saudi Arabia that are really boosting the outlook. So now we're going from this scenario where the outlook was being diminished to where it's being improved. That provides a tailwind for the market, also kind of a carrot for the market to run for. And so what I see now is kind of a melt-up. You know, we have this long-term outlook that's really robust; it had been kind of diminished, but now that robust outlook is back into play, and the market is melting back higher to those levels to to match that future valuation, and it's been quite a melt-up. Some of these companies that were hit so hard over the past couple of months have really had a significant rebound. Let's go ahead and get right to that list of the four companies in the AI infrastructure field that have seen quite a rebound this week. What's the first company on that list?
Well, I think the first one would be Nvidia. Nvidia really is one of the, if not the, it's the most important stock in the market right now, the most heavily owned; it's the center of the AI push. Its stock rebounded about 50%, I think, from its lows, um, right now it's being driven higher by these deals with Saudi Arabia, with Humane. Injected billions of dollars into the annual revenue outlook over the next five years. That's not counting replacement and upgrade cycles that are are to ensue or any additional follow-on investments. So this really is a a huge, a huge deal for Nvidia. I would say that the Saudi Arabia deal more than makes up for the China deal, you know, the China sales that were curtailed by restrictions. So again, we're looking at a a best-case scenario for this stock. Yeah, they had a lot of positive news this week that is sending the stock so much higher, like you said, and this is even before Nvidia's earnings report comes out. Do you expect to see this run-up continue for Nvidia all the way up until whatever comes out in earnings?
Well, right, so I think that Nvidia's stock could run higher until the earnings report. I would put a target of 25% on that run that would align it with the market consensus at the report. What I'm expecting to see is strength. There's going to be some negative impact from China, but there will be more strength shown in the core business, in domestic business, and in the guidance, which will now include this Humane deal. So I would expect at that point to see analysts start either reaffirming back to the high end of the range or lifting their targets and leading the high end even higher, which right now is another 25% on Nvidia. So in the best-case scenario, we're looking like a 50% or more gain in Nvidia stock potentially by the end of the year. That's a really big call for a really huge company that people were expecting to see a little bit of a slowdown in growth because it's just gotten so big so fast. Nvidia went well below $100; was trading at I think 92 to $95 at some point. Do you ever expect to see Nvidia back down in that range again?
No, I, I don't; I really don't. Right now we're looking for Nvidia to keep moving higher. I think that once it crosses to a new all-time high, we'll get some FOMO in the market, and that'll accelerate the move, and I think that it's doubtful that the market will ever move back below that level again. Very interesting. Nvidia, of course, is the the hugest AI play for infrastructure buildout of AI across the US and really the world. Let's get on to the next pick in this list of companies that are really related to the buildout of AI.
Well, right, the next stock on my list is Advanced Micro Devices. It's the number two player in in and GPUs. It got a deal equal to Nvidia's with Humane. So again, we're looking at a multi-billion dollar injection into the outlook over the next several years. Each year that's worth double digits in, you know, sequential revenue growth each year, um, it's really fantastic news for this company; it's amplifying the outlook, um, we've already got analysts lifting their revenue targets, lifting their stock price targets. As with Nvidia, I would expect the next earnings report to reflect some negativity related to China but more than offset by domestic strength and this new deal. AMD is such an interesting stock to talk about because it was hurting, probably the worst of all of the AI stocks in April. This stock just kept going down since the start of the year. It's nice to finally see a rebound happening, but I think some investors have been scared away from AMD. Do you expect any more volatility to continue, or is it just an upward trend from here?
Um, I would expect to see some volatility. The stock, um, did make a pretty significant correction; there was quite a surge in the price with the initial AI bubble, so there's going to be a little bit of volatility as the market works through some of these resistance points, but I think the long-term trend is this stock is up because now the business fundamentals are starting to reflect the AI traction that we thought it was going to have last year. So Nvidia had all the traction last year, first-mover advantage, had all the chips available. AMD is catching up; it's starting to gain traction. Its long-term outlook is now being affirmed by these news events. So I do expect to see its stock price continue to ratchet higher and trend higher over time. Yeah, analysts were very bullish on the future of Nvidia. What are they saying about AMD?
Oh, a lot of the same, a lot of the same, uh, not quite as robust as Nvidia, but the takeaway and the chatter after this Humane deal was announced is that AMD is an equally good, uh, benefactor from the deal; it should sustain, uh, business growth for a long time, and it's really, um, an eye-opening, um, move for investors in AI, kind of pointing at Saudi Arabia as being a big AI center, but also that AI spending is generally still very robust. Yeah, I think that's reflected in the next stock on this list too, where there's a lot of spending going on in the AI buildout across the US. So let's get to the third company on your list.
We're right, that's Super Microcomputers. Now you think that, uh, this, these deals, like with Humane and other deals with Nvidia and AMD are for their chips, but Saudi Arabia is not going to be buying chips directly from Nvidia because you don't just plug chips together; they have to be in a server or a rack-scale system, and that's where SMCI comes in. It makes, um, some of the most advanced servers and rack-scale systems using Nvidia and AMD chips. It also got a very large deal with Humane, another multi-billion dollar injection each year for the next 5 years that has really supercharged the outlook. Now with this stock, as you know, it suffered a lot of negativity over the last year with a short-selling report and accounting and proprieties, but we've moved past that, um, the last report was a firm by the accounting agency, um, we're looking at growth; we're looking at cash flow; we now have a boosted outlook. Analysts are becoming more positive on the stock and lifting their stock prices, uh, so I see this stock also entering a pretty significant reversal and rebound, pretty solid double digits to triple digits over the next few quarters. Well, that would be impressive future growth after the growth it's already seen just this week. Let's look at that stock chart because this is a really impressive growth story in just one week.
Right, so you can see that SMCI's price has given up a little bit of its gains. These candles here are, you know, mildly concerning because they're red and they reflect a little bit of resistance, but what you can really see is the stock price has surged like 50% in the last couple of days. We've moved above these critical moving averages; we're showing some support above those averages, which to me is a clear sign of a sentiment reversal and, um, a precursor to a more sustained rally. Yeah, this stock has had so many moves in the last year, lots of ups and downs for SMCI, and I know you said a lot of the accounting issues, the concerns about this company have been addressed, but every time we talk about SMCI on this channel, there are still plenty of retail investors out there that still have concerns about the legitimacy of the executive operations of this company. Is that still a valid concern, and clearly it's one that many people still have?
Right, it is a valid concern, but it's not a pressing concern anymore. We're going to want to keep an eye out on this company, but as I've been saying, the business is strong; it's robust. These new deals have really amplified the outlook; market sentiment is improving; the technicals are very positive, reflecting that shift in sentiment, um, barring bad news, I would expect to see this stock trend higher over time too. However, like with AMD, there's significant overhang in the market; plenty of people that have lost and are still holding on to the stock as we move up to some critical technical points. I would expect to see people trying to get out of the market, cutting losses or even taking profits from these lows, which will induce some volatility, uh, just use those, those points as times, uh, to get in. Well, now it's time to get to the last company on your list, and this is that name that many investors might not associate with AI, and that is true of some of the stocks on our list of 10 best AI stocks to buy in 2025. AI is impacting way more of the market than investors might realize, so some of these names could surprise you. You can scan this QR code or click the link in the description of the video to get that free download just for our YouTube viewers today.
Well, Thomas, let's get back to that last company on your list. This is a company that just reported earnings and is seeing a big boost because of it, right? That's Cisco Systems. So you think Nvidia, AMD make all the chips for these servers; the servers are being packed into these data centers; Cisco's equipment is being used to link all those servers and data centers together, um, its report was really awesome; it reflected strength in all segments, all in markets, at all geographies, um, cybersecurity was really the strongest segment, but that's not surprising given the rise of, um, cyber threats. Those cyber threats are being fueled by AI the same way that AI is kind of enticing them to come after them, you know, so cybersecurity is going to be hot for a long time, but just again, Cisco, better-than-expected results, strength across all segments, guided higher, analysts lifting targets has the market moving significantly higher, about to set a new all-time high, which for me is an important pivot point for this market, could lead to 10 to 20% upside within weeks and then a longer-term uptrend after that. Yeah, you already mentioned this a little bit, but I want to talk about Cisco is a company that's been around for forever. How is this company specifically tied to AI and the buildout of AI?
Well, right, so Cisco isn't one of those exciting tech companies that's like advancing the edge of technology, but when you think about it, all the technology today is being linked and connected together with some of Cisco's products. So when AI came to the forefront, all of a sudden all the old things needed to be upgraded to AI capable. So that is one boost for Cisco's business, but alongside that we realized we've got X amount of data centers; we need 10 times that amount or 100 times that amount. So not only is there this upgrade cycle going on, but there's this huge push to build out all of this new infrastructure, and that is supporting Cisco's business but also has kind of created, um, like a generational shift, like with Microsoft, has changed its business model over the years to kind of meet the times. Cisco was rolling with the times, shifting from legacy into the new AI future. All of these companies are a part of the AI infrastructure buildout that's happening all over the world right now, but once that buildout happens, will these companies see a pause? Is this just the momentum on the front end of this buildout, or will that buildout continue for a long time to come?
The buildout will probably last for another 5 to 10 years. There will be a topping out of the business; there could even be some normalization or contraction, but I think that it will normalize at a very high level and then be sustained by a long-term and lingering persistent upgrade cycle. We already know Nvidia's Reuben is coming out pretty soon, just next year, so you have to assume that all of these Blackwell data centers will start becoming upgraded to Reuben systems over time, and so that's just a persistent cycle that will help sustain all of these businesses. Yeah, very good point. You don't just build any technology and it stays that way forever; there's constant upgrades that I think will keep these companies busy for a long time to come. All right, Thomas, um, last thing too is just what advice do you have for investors who we missed the low that happened just last month? Now that these companies are on the surge upward, is now a time to buy? Will they continue to surge even higher? How do retail investors play these big swings in this AI field?
Yeah, don't ever beat yourself up for missing the low, the low of a movement; it's almost impossible to predict those things. The market can rebound and then continue its downtrend. The best thing to do is to wait for the bottom to happen and then wait for the next clear signal, which is what I think we're seeing now. You might miss out on the first part of the move, but the meaty portion of the move is still to come. Just be patient and be prepared to get in when the signals are there. Very good advice, as always, Thomas. Thank you so much for your time today, and thank you for watching everyone. Let us know what you think about these names in AI and the big runups they've had this week. Did you have a good week in the market and earn some profits yourself, or are you just getting into some of these names as you see the start of this new resurgence, like Thomas said? Let us know your thoughts in the comments. If you're not a subscriber to this channel yet, we'd love to have you subscribe and follow along for all of our daily news content just like this. Thanks again for watching, and as always, happy investing.