This Is Far Bigger Than Nvidia (3 Stocks Essential to the AI Boom)

All eyes are on Nvidia's earnings report, but  these three stocks could be even bigger. Joining   us today is Marketbeat analyst Chris Marott with  a list of three stocks that are bigger than Nvidia   and are really a huge essential part of that next  AI boom. Chris, so glad to have you with us today.   Of course, it's Nvidia earnings day. We are  recording this before that earnings report came   out. Let's just talk about why this is such a huge  day for every investor. It's a huge day because   like you saw at the end of July when many of the  hyperscalers announced and then you saw it with   Palunteer, Nvidia is that name that everybody's  watching for confirmation of the AI trade. Nvidia   is not only a a company that investors are going  to be looking at for the headline numbers like   revenue and earnings and profit margin and all  of that good stuff. There's also going to be   questions about Nvidia as far as its ability to  have the cash on hand to keep doing the financing   that it's doing to keep the AI trade going. Yeah,  really Nvidia is now the financer of a lot of   the AI story. And that makes a lot of sense for  sure. But let's get to the thesis of this video,   and that's that there are plenty of stocks out  there that are bigger than Nvidia. It's not that   we as investors should ignore Nvidia's earnings.  There's a lot to pay attention to here that will   have ripple effects down the entire market. But  there are other stocks out there, and this is   something we've heard from viewers time and time  again, is that they are turning their attention   to other stocks where they're getting much bigger  returns this year. Are we seeing that to be very   true with Nvidia, Chris? I think that's absolutely  true. And again, I'm not going to say anything on   this video that's going to be disparaging Nvidia.  I actually happen to think the stock is a little   bit undervalued where it's at right now. But  what we're talking about in this video, Bridget,   are those companies that are targeting exactly  what investor sentiment has been at. It doesn't   matter how many chips you have in a data center,  how fast those chips are, they're useless if that   data can't move between the racks efficiently, if  you're not cooling down the data centers. That's   the type of infrastructure that is going to be  needed right now. And this infrastructure is   going to be needed um regardless of all the noise  that's going on with the data centers. I read a   statistic just the other week that even if only  onethird of all of the proposed data centers are   built between now and let's say 2029 2030 that's  still going to represent like $10 trillion of   investment money going into the economy. That  money has to go somewhere. And for investors,   there are some stocks that we're going to be  talking about today that that look like they're   going to be big beneficiaries of that. Yeah, we're  going to get right into those three names here in   just a second, but I wanted to to focus in on  what you said about Nvidia that this is still   a stock that many many people are bullish on. Uh  you are bullish on it. Our market beat analyst   Thomas Hughes is very bullish on Nvidia, too. He  was just on the show uh yesterday talking about   his expectations for a market rally later on this  year and he gave an estimate for Nvidia of having   uh upwards of 600% returns for investors  over the next decade. So he still sees a   lot of growth coming down the road for that. If  you missed that video, make sure to go back and   watch the full interview yesterday. Again, this  isn't a video saying Nvidia is not a great stock.   It absolutely is. But there are so many other  stocks that are seeing even larger returns for   investors in the current market that we're in and  the stage of the market that we're in right now.   And that's where you want to have your eye out  for that next Nvidia, that next major hyperscaler,   the next Google, maybe even that next innovative  company like Tesla. And that is a special report   we have at MarketBeat right now. You can scan  the QR code or click the link in the description.   This is a report on seven innovative stocks that  could be that next giant Nvidia or Google or Tesla   companies that have a huge growth trajectory  right now that they're in the middle of that   hyper growth phase rather than at the top of  that hyperrowth phase. So, if you want to check   out that report and that list of seven stocks  that could be bigger than some of the giants   we see today, make sure to click the link in the  description and get that free report right now.   Normally, it's $30 in Market. It's free for you  today just because you're watching this video. All   right, Chris, let's get into the three stocks that  you are looking at and kind of the same thesis   here. These are companies that could continue to  have outsized returns for investors because of   the important role they play in the AI story. What  is that first stock that you are looking at? So,   the first stock that I'm looking at is Arista  Networks, ticker symbol is a ne. When we're   talking about infrastructure, this is about as  basic and as boring as it gets, but it's also one   of the more essential names on this list. Aerys is  providing the plumbing uh between all the racks.   So you have to find a way to connect uh these data  center servers to each other and Arista networks   is critical to providing that connectivity. That's  what this company specializes in. they they design   and and uh and distribute the high-speed Ethernet  switching that connects the servers to each other   and increasingly is not only connecting the  servers within a data center to each other but   increasingly connecting data centers to each other  and again that's just going to be an essential   part of whatever this uh AI transition looks like.  Yeah, you can see just how essential this company   is in their earnings report. They have had some  incredible last few quarters. This last quarter   that just came out uh earlier in August. Very  impressive beat here in earnings. Absolutely.   And it and it's not just in the last quarter. Over  the last couple of quarters, we've seen revenue   growth quarter after quarter in the high 20%  range. And management's been guiding to continued   growth into next year. Um, and it's specifically  calling out obviously AI networking as being a   key source of that revenue. And so they not only  expect to keep expanding at that around 20% clip,   but they're expecting that that number could go  even higher. And what I notice is when you look   at the company's earnings estimates, the earnings  estimates are projected to be right around that   same level, about 22% over the next year. So,  this is a stock that I I think still has a lot   of room to run. Let's look at that room to run  yet for this stock. I know uh a lot of investors   don't put a lot of stock in what the analysts  have to say, but we want to take a quick look   at least the trends we're seeing. Are they moving  the stock even higher from where it is today? They   should be. Um, what you've seen with Arista,  which I really like if I was if I'm looking to   get involved with Arista right now, is it's had a  nice healthy pullback off of a high of around 210   that that it reached just about a week and a half  ago. It was up around 210. It's had a nice healthy   pullback. It's it's a nice place for investors to  get in, especially when you look at where analysts   are taking it. The consensus target right now  is $226. That's about a 19% upside. But if you   look at where analysts where some recent targets  are, the targets are far higher than that 226.   I'm seeing a 258 from UP UBS group. I'm seeing a  250 from Keycorp. You're seeing analysts move that   price target up. And I understand investors can  be skeptical about analysts because analysts do   tend to maybe they tend to maybe drag their feet a  little bit as far as raising their price targets.   But if you see them raising their price targets  now with a stock that's still up 45% for the year,   that's a pretty good sign that they believe  that what Arista is projecting in their earnings   reports is not fiction. Yeah, there's some real  money coming in and there's some real growth   projections still very much down the road for  the stock. One other thing to point out before   we move on here is uh there's a huge influx of  institutional ownership in Q2 this year. I think   that goes to show that there's a broad confidence  in this stock as well. Absolutely. So right,   if investors are maybe skeptical about analysts,  institutional ownership should be something that   really kind of alleviates that because  you're seeing institutions, you're right,   they have this has been the strongest buying  they've had since the fourth quarter of 2024. They   were piling into the stock and and that explains a  little bit probably why the stock has a valuation   that may have some investors wincing a little bit.  There's a lot of institutional money that's flowed   into that to support that valuation. The company  has to execute. There's no question about it. But   by the company's own estimates, you're probably  talking about 20% revenue growth or higher over   the next several quarters. This this looks like a  stock that's going to move higher. Yeah. I think   one thing to talk about here is that some  investors don't like to look at stocks when   they're this close to the top of their 52- week  range. They're they're this close to their highs.   But I'm wondering if this one is susceptible to  any kind of volatility that we might see in the AI   market over the next couple of months, especially  post that Nvidia earnings report. Sometimes we see   a positive market reaction, but so often we see  a little bit of a negative market reaction when   we see Nvidia reports if there is that overall  broader AI market volatility. Could this stock   also be impacted and and be a better chance to buy  on a dip? I do. And the reason why is because once   again, these names that we're talking about today  are not alternatives to Nvidia. They're going   to be companies that are essential to however  the data centers get built out, whatever GPUs   they're using, whatever chips they're using,  they're going to need a way to connect them.   And I can see that a company like Arista that  has a high valuation could get uh you know could   get sucked down lower if if the market sells off  because Nvidia doesn't deliver the numbers quite   as high as they were expecting or the guidance  isn't quite as good as they were expecting. Notice   I'm projecting that Nvidia is probably going to  have a very strong report. But that would be a   buying opportunity. I think the long-term story  is the one you want to watch here and it's very   favorable for a company like Arisa. I think this  is a really good candidate to add to my Brits buys   watch list. I think those projections of future  growth and just the essentialness of this company   make it a really good and interesting stock to  add to the this list. I would agree Chris that   I don't think that it's going to be immune to  any ups and down volatility just on sentiment   in the overall AI market. But I think longterm  the growth story here is very much intact. So,   I wish it were slightly lower at the price I'm  adding it to my list right now, but we're going to   add it and see what happens in the future. Again,  this is my paper trading watch list. I try to add   a stock for every video we talk about to see how  it moves over time. It's been a little while since   I've added one to the watch list. So, this one  is making it today. If you haven't checked that   out yet, you can scan the QR code or just go to  marketbeat.com/bid and you can take a look at all   of the stocks that we talk about on this channel.  All right, Chris, let's get on to the second name   on your list. What company are you looking at  next? This is one that a lot of our viewers   have heard us talk about before. They've asked  about it before, but we're going to bring it up   again because it's the story is still there. It's  Verive Holdings. Uh ticker symbol is VRT. This is   a step away from the semiconductor conversation,  but it's equally as important to the idea of AI   infrastructure specifically as it relates to data  centers. We all heard the story. You're going to   be running these data centers. They're going to  run 24/7. they run they're they're going to need   massive amounts of energy and those servers and  the related equipment get very hot which means   they need equipment that's going to be able to  cool them down efficiently. That's where Verdiff   comes in. This is this equipment is essential  to keeping those data centers from overheating   and that's become a genuine bottleneck for getting  these data centers built which means that there's   more demand than Verdiff can keep up with. But  that's a good story for investors. Yeah, this is   a name that we have covered quite a bit talking  about AI infrastructure for a lot of the reasons   you just mentioned that this one is essential for  that cooling piece that is again so essential in   all of the AI data center buildouts happening  right now. This stock has had some volatility   though I want to go back and look at the chart.  Also speaking of Bridget Spies, this one made it   on my Bridgest watch list back in December. It's  up 40% for me from when I added it onto that watch   list, but overall this stock is still up over 100%  this year. And that's with a pretty big pullback   from the highs that it saw uh back in May. Yeah,  it it's pulled back pretty significantly there.   I think some of that is just profit taking to  be perfectly honest. I think it may be dressed   up in some other language, but I think this is  just investors who saw the stock get up around   $380 and they might have just been saying, you  know what, it's time it's time to take some some   off the table. I mean, this is a stock that,  like you said, even with this 20% pullback in   the last 3 months, it's still up over 107% in the  last year. That's a tremendous growth. It's got a   valuation in the in the 50s as far as current  earnings go. It It's reasonable to expect that   some investors may be looking to take a little bit  of that risk off the table. The question is once   they've taken that risk off the table, and with  the stock down now about 20% in the last 3 months,   is now a convincing time to get in and buy?  And I think it and I think it still is. Yeah,   that was my biggest question is is now a good  buying time for this. Do you have any fears,   Chris? That's another question that when you see  investors taking profits at a high like that,   that they are fearful of an AI bubble and that's  why they took profits. Do you ever read into why   did so many people take profits and we're seeing  this stock pull back? You know that that's a great   question, Bridget. And the answer is I can't read  the mind of every investor. I imagine that you're   right. I imagine that for some investors, they see  the headlines, they can't ignore it. There's going   to be a lot of noise in this space as far as is it  going to be regulated, how much is it going to be   regulated that you can't really do anything about  that. But yes, I imagine that for some investors,   they might be wanting to take risk off the  table. But I think for a lot of investors,   it's just a math situation. If a stock's up over  100% from where you bought it, it's logical.   We've talked about it with Palunteer. We've  talked about it with Nvidia. We've, you know,   we've talked about it with some other names. It's  just logical that investors should take some of   that profit. You never get broke from taking a  profit. Take some of that risk off the table and   put it in either have it sitting in cash or use  it and deploy it in other areas of your portfolio.   And I really believe that's more what's going  on here because there's really nothing that I'm   seeing in Vertive's results that are suggesting  that management sees a problem here. Yeah,   that's what I really wanted to talk about next  is you can't ignore what's happening with the   price action, but you also can't ignore what's  happening with the actual earnings report. So,   let's dive into that a little bit too because this  is another area where we continue to see a lot of   strength and a lot of future growth projections.  Yeah. So, we just talked about, you know,   that 20% sequential growth, 20% year-over-year  growth with a company like Arista. You're seeing   the same story in Vertive. 20% revenue growth.  You're seeing strong earnings growth. I mean,   the last quarter alone, uh, they they came in  with adjusted earnings per share of around $152.   The year prior to that, that was at 95. I mean,  that's strong growth. And if I look back over the   three prior quarters, the growth was about the  same in earnings. And again, earnings are what's   going to drive the profits on these companies.  And you're seeing just strong growth. And again,   that's just because of the demand is going to be  there. You're you're not going to be able to have   these data centers built and operating without  a way to efficiently cool that infrastructure   that's inside the data center. And Vertive is one  of the leaders in providing that. Yeah. and being   one of the leaders and and really having that  hold on the market in such a key area is why   we are saying that this is one of those stocks  that qualifies as potentially having those even   bigger results than the leading companies like  Nvidia because there's so much demand growing for   these stocks and that's why we are covering these  today. It's also why it's important for investors   to look at some of the other names than just the  key giant players out there who might see even   larger results. Of course, in players like Nvidia  could continue to see slow and steady growth,   but these are some of the names that we are  looking at that could see even larger outsiz   results for investors in the next 12 to 18 months  ahead. So, if you want to look at even more names,   make sure to scan the QR code and go back to that  report. It's seven different stocks that could be   bigger than Nvidia, Google, or Tesla. They cover a  lot of different areas, but these are seven names   that are showing the strong growth potential  for the next 12 to 18 months to have some some   good growth results for your portfolio. So, make  sure to check out that free report today. Okay,   Chris, let's get on to that last stock that you  are looking at today as potentially even bigger   results for investors than Nvidia this year.  Yeah. So, this is the one of the three names we're   talking about. This is the one that I'm not going  to say it competes with Nvidia, but it would be in   that category of stocks that you would say if you  were going to choose a stock other than Nvidia,   what one might you choose? And and the name here  is Broadcom. Ticker symbol is AVGO. AVGO. Many   investors are familiar with that. Again, this is  a name we've talked about a ton on this channel.   I know you've talked about this with Thomas quite  a bit. AVGO is in the position of building out the   custom what they call the ASIC, the application  specific chips for the AI infrastructure. And   the specific reason that I would put investors  as far as how they should orient themselves to   thinking about Broadcom is um there's a lot of  hyperscalers right now that are using Nvidia   chips or they say we're using AMD chips or they're  using a combination of the two. where the world is   moving and where I think these hyperscalers would  like to move is a world in which they're creating   their own chips and they're creating their own  AI infrastructure and right now Broadcom is that   name. That's why they keep on gaining share as  hyperscalers are trying to customize their own   AI infrastructure. That's where the story really  comes in with Broadcom. And this is a name that   is also on quite a bit of a pullback right now.  It's seen a lot of volatility like all of the   names really that we've talked about today and  essentially the entire AI sector has seen a lot of   uh sharp ups and downs even in just the last 90  days or so and Broadcom absolutely fits that bill   looking at the high it saw back in May. Why are we  seeing that kind of sharp increase sharp drop in a   stock like Broadcom? Well, I think a lot of it is  customer concentration when it comes to Broadcom.   I think there's a lot there is some concern that  Broadcom generates a lot of revenue from just a   very few amount of its customers. At least that's  the case today. And that means that if demand from   any of those customers were to drop, it's going  to hit the company's top line and bottom line   significantly. I think that's why you're seeing  a lot of the volatility in the stock. And again,   I think it's also part of the overall um fatigue  about AI is their concerns about, you know,   again, you're talking about stock that's trading  around 69 times current earnings, although it's   only trading at about, from what I see, it's  only trading about 35 times forward earnings,   and that's not that big of a premium to  where the S&P 500 is today. All right,   let's look at what they're doing for earnings.  Are we seeing the same kind of growth as the first   two stocks that you just mentioned? They are.  Again, I mean, I think this is a very similar   story for all these. You look at year-over-year,  I think the revenue has even been stronger. Um,   in they just reported earnings, um, it looked  like in June, it was the last time they reported   earnings. 22 billion in revenue and that was  compared to 15 billion in the prior year,   244 in adjusted earnings per share as opposed to  $1.56 the year before that. So, again, this is a   company that just keeps on beating year-over-year  estimates. And remember, it's really important to   remember that this is happening at a time when  the comps are becoming more difficult. The bar   is being raised higher for these companies and a  company like Broadcom keeps going over it. Yeah,   it's that whole theory of price to perfection that  we talk about all the time and this is a company   that continues to outperform those expectations.  Let's talk a little bit more about um just how   much the stock has run up, how familiar the  stock is to investors. I think sometimes when   investors are looking for real growth, they're  looking for that hidden name that they've never   heard of before, can you still find those kinds  of outsized returns in a stock like Broadcom,   especially given where it's trading today? Well,  analysts certainly seem to believe that's the   case. I mean, the consensus target is 491, uh,  which is about a 36% increase, uh, you know,   from where it's trading right now. And you can  see the stock has had a significant pullback since   about the beginning of June. And again, I think  a lot of this has just been in sympathy with the   whole AI is getting overvalued and a stock like  Broadcom's going to go down in in relation to   that. But where the stock is trading at today  looks like a very nice pullback from that,   you know, from that recent all-time high. I  think it can go back to that level. And one of   the reasons I believe it is again is just like  the other two names we've talked about, you're   seeing a lot of institutional investing come into  the stock and you've been seeing that in the last   in two out of the last three quarters you've  been seeing some nice institutional buying of   this name and and so again you can distrust maybe  what the analyst sentiments are saying because   that tends to lag. I will agree with that but  sometimes institutions are the tell and they're   certainly piling into the stock. Yeah. I think  one other thing to look back on on the history   of AVGO a little bit is just looking back on what  their chart looks like over the last, you know,   five years and even really the last two years. In  2025, we really saw a a very steady up and to the   right kind of price action with ABGO after that  April uh downturn that everybody in the market   saw in 2025. But then you look at 2026 and it does  look a little bit more choppy. It looks a little   bit more volatility even though we have reached  those new highs. What do you think accounts for   that? Is that just what 2026 has been for most  of the AI market or is there something specific   happening with Broadcom that would lead this stock  to be a little bit more choppy in 2026 than it was   in 25? It's part of the AI trade and it's just  part of that idea of uh if you know what happens   if any of these core customers start to pull back  on their investments, start to pull back on that   idea of customizing their own AI infrastructure.  But I don't see that as a story that's really   going to go away because I think again that's  where you're going to want to go if you're some of   these companies. Eventually you're going to want  to wean yourself off of your dependence on some of   the names like Nvidia, some of the names like AMD.  And that's not going to happen overnight. That's   why Nvidia's got a long runway. But eventually  you're going to want that story to happen. And   for that story to happen, companies are going  to need a name like Broadcom. All right, Chris,   thank you for diving into this list today. If you  want to hear a very bull outlook on the AI market   and where the market could rally into the end of  the year, make sure to watch that full interview   with Thomas. We just posted it yesterday. He  gives his price predictions for where Nvidia   could be heading and also his exact date of when  he thinks that major market rally could happen   later on this year. Make sure to watch to the end  to see that date and watch that full interview