Today's resurgence in AI-related stocks such as Meta Platforms, CrowdStrike, and Broadcom can be attributed to several factors.
After a tough week, AI-focused stocks are shining bright today, primarily due to Nvidia's upcoming earnings report. As a mega-player in the AI industry, Nvidia's earnings, guidance, and insights on broader AI trends could significantly influence the sector and potentialy the broader market.
At the 12:52 p.m. ET mark, Meta Platforms' shares gained 3.5%, while CrowdStrike and Broadcom surged by 5% each.
Eyes on Nvidia
The spotlight is firmly on Nvidia, as it prepares to unveil its fourth-quarter and full-year earnings results after market close. Analysts anticipate an EPS of $0.85 and a 72% year-over-year revenue growth to $38.1 billion.
Beyond the financial numbers, investors will watch with interest as CEO Jensen Huang discusses emerging topics such as DeepSeek's impact on AI capital spending and the eventual ease and affordability of replicating large language models. Analysts may also quiz management on potential policies regarding export controls on chips from the Trump administration, should they come into effect.
Company-specific news suggests Meta might be considering building a new data center campus for AI projects, with a potential cost of over $200 billion. However, Meta's spokesperson refuted these rumors, categorizing them as mere speculations.
Bullish on CrowdStrike
Bank of America analyst Tal Liani upgraded CrowdStrike, maintaining a buy rating and raising his price target to $420. Liani believes the company will meet or surpass consensus estimates during their March 4 earnings report and expects growth in its core business alongside increased revenue from cross-selling and up-selling.
Broadcom's Connectivity Advancements
Though Broadcom made headlines earlier for its data center connectivity advancements, it was quieter yesterday, announcing a new tech that enables further interoperability between AI data centers.
A Turning Point, Yet Risks Remain
Nvidia's results might well serve as an inflection point for the AI sector. Positive EPS and guidance, along with enthusiastic comments from Huang, could reinvigorate AI stocks. Conversely, disappointing numbers and Huang's concerns could signal further declines.
Nevertheless, these are short-term expectations. Longer term, AI stocks remain vulnerable to higher interest rates and potential economic downturns. Such a period, however, could lead to further rate cuts.
CrowdStrike and Broadcom seem better-priced alternatives than CrowdStrike, trading at nearly 34 and 27 times forward earnings estimates, respectively. Although Broadcom's custom chip business and Meta's AI monetization capabilities have drawn analyst attention, I currently do not own shares in any of these large AI stocks.
- With Nvidia's upcoming earnings report approaching, investors are closely watching the company's potential announcements regarding DeepSeek's impact on AI capital spending and the future of replicating large language models.
- Analysts and investors are eager to hear Nvidia's CEO, Jensen Huang, discuss these topics during the earnings call, as they could significantly influence the AI sector and broader market.
- Meanwhile, Bank of America analyst Tal Liani upgraded CrowdStrike, maintaining a buy rating and raising his price target to $420, citing the company's potential to meet or surpass estimates during their March 4 earnings report and experience growth in its core business.
- Broadcom also made headlines by announcing a new technology that enables further interoperability between AI data centers, which could have appealing implications for the broader AI industry.
