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| What are this week’s market risks or opportunities? |
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| Alphabet just posted a record quarter, with EPS hitting an all-time high. Free cash flow told a different story: $39.1B in operating cash flow couldn't cover $44.9B in capex, a negative quarter. |
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| Tesla followed the same pattern, beating on revenue but landing negative on free cash flow too, as $5.8B in capex outran $4.7B in operating cash flow. |
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| Both are spending faster than AI is paying them back. Capex is up more than 100% year-over-year at each, and Alphabet just raised its full-year spending target again. |
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| That cuts both ways. The money is still flowing hard into AI infrastructure, which is why semis and memory names rallied within the same session the numbers came out. But free cash flow is growing slower than capex, and that gap gets more expensive to carry as rates climb toward a multi-year high, with another hike expected in September. |
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| If hyperscalers keep spending regardless of their own cash flow, the companies supplying that spend keep getting paid. Whether Alphabet and Tesla can keep funding it themselves is the real question now. |
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| Which trades should I consider? |
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| Nvidia’s already the obvious AI name and if that's your mental model for the AI infrastructure trade, it looks closed. It isn’t. |
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Capex for AI buildout doesn't stop at the chip makers. Some of the names cashing those checks are still priced like the market hasn't connected them to the flow yet. Here are 3 high-conviction picks from our AI-powered ProPicks models, each carrying real fair value upside:
- Everforth (EFOR), IT services and cloud system integration: 51.2% fair value upside, in our Small Cap Sprinters ProPicks AI strategy.
- IBM, hybrid cloud and data server systems: 24.6% fair value upside, in Dominate the Dow.
- Alliance Resource Partners (ARLP), which supplies power to the data centers running this build-out: 22.9% fair value upside, in Energy Elite.
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Two adjacent names worth a look, even with more indirect AI exposure:
- Gartner (IT) at 67.5% fair value upside in our Top Value Stocks strategy
- Salesforce (CRM) at 59.5% fair value upside in Dominate the Dow.
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| These aren’t the AI names everyone's already watching and that's the point. |
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| Should I consider this trade? |
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| Kyndryl (KD), the world's largest IT infrastructure services provider, just had an ugly quarter, missing on both earnings and revenue, with the stock down roughly 70% over the past year. |
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| It isn't the business breaking down. |
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| In March, our ProPicks AI models flagged Kyndryl as deeply undervalued, fast-growing in the right areas, and financially sound. It trades well below InvestingPro's fair value estimate, and the drop tracks governance headlines more than the numbers themselves. |
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| Hyperscaler-related revenue is up 59% year over year, management is buying back stock, the balance sheet is solid, and analysts still rate it a Buy. |
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| To be fair: Kyndryl was spun out of IBM in 2021, and some legacy customers still buy straight from IBM, which is a real hit to revenue, though not to margins. European sales cycles are stretched too, and last year's control weaknesses cost the company its CFO and general counsel. |
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| None of that touches the hyperscaler story. Next earnings isn't until August 5, so this is the window to weigh the name on its own terms, before the next print resets the conversation. |
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| Data correct to 22.07.2026 |
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