This is Bigger Than Nvidia. These 3 Stocks Win the Next AI Buildout.

Nvidia and the rest of the Mag 7 are up just 1% for the year, while many other names connected to the AI buildout are beating earnings quarter after quarter and earning institutions a lot of money right now. Joining us today is Mark Chaken with Chaken Analytics. He has a list of three stocks connected to the AI buildout that many retail investors are totally missing right now. And these names have incredible growth stories. I'm excited to cover them today. Mark. Again, they're names we've barely ever even talked about on this channel before because they're not the flashy names making headlines. And that's exactly where retail investors should also be looking right now. So, I can't wait to dive into this list today, Mark, but I also have a lot to cover with you. I want to start out by talking about the broader AI story and what is happening in the market right now. We just saw uh a big dip on Friday, but before that, the AI boom was here the last month. We saw incredible growth stories in many stocks connected to the AI buildout, the semiconductor space, the memory space. So, let's just look at what you think is happening in this whole AI market right now. >> Well, I think the AI boom uh has cooled off a bit. It was obviously red-hot and that's why we got the meltup to 7600 just a week ago on Tuesday. But Friday's pullback was triggered by sort of outside events uh starting in South Korea where the key semiconductor stocks pre uh opening in the US were down very sharply for no fundamental reason having to do with leveraged ETFs in South Korea. And then uh you got an unemployment report which increased the possibility of a rate hike in July as opposed to a rate cut that uh the president wants to see. So you had a perfect storm of selling pressure in the semiconductor stocks on Friday. But you alluded to something that I think is really important that uh there are stocks out there that people just aren't focusing on. And we're going to talk about some of them today. But before that, I want to talk about the big elephant in the room, which is the SpaceX IPO that's going to be priced on Thursday evening and then start trading under the symbol SPCX on Friday. >> Yeah, let's talk about that because I think that there's a strong connection between that SpaceX IPO and what we're seeing in these mega cap AI stocks right now. Do you think there's a connection there Mark? >> Oh, I do. I mean, we're talking about $70 billion or maybe $75 billion of a public offering that they're offering in a sort of unusual circumstance to the public investor as well. And that's a lot of cash that people have to come up with even if you're a big institution. So, what's been happening is there's been a lot of selling going on in the Magnificent 7 stocks, the Apple, Amazon, Alphabet complex to raise cash for the SpaceX IPO. So to put it in perspective, as of Friday, the S&P was up 8% on the year, but the MAG 7 ETF, MAGS, was up less than 1%. That's partially because what's been happening in the last uh two or three weeks is people have been selling uh the MAG 7 stocks to raise cash to be able to participate in the SpaceX um offering. And it's actually been going on a lot longer than that, but the market moving to new highs on the back of the semiconductor stocks has matched some of that. You had Apple that was near a new high ahead of their new product announcements yesterday, but in general uh Microsoft Meta Amazon have been lagging and that's where most people are concentrating and I think that's a mistake. >> Yes, so much attention has been given to the Mag 7 over the last couple of years and for good reason. These stocks have given investors a lot of great returns over the years, but right now it's not where the the biggest growth is. And I know a lot of investors are already seeing that when you look at MU or Intel or Western Digital, these kinds of companies have seen those tremendous growth stories. And that's where a lot of the retail investing community is looking for is they're looking for those really outsized returns and not so much these small 1% gains that the Mag 7 is seeing this year. And so that's what we're going to focus on are some of those names that aren't quite as popular as MU or Bloom Energy but are still tied to this AI buildout that are still doing really really well. I do have one more question on the SpaceX story that you brought up first though before we get into this list today and that's talking about whether it's wise to be looking at raising capital right now to invest in SpaceX in this IPO. We all know institutions are going to be looking that direction and a lot of retail investors are also looking to try to get a piece of this massive IPO. Do you think that's a good idea right now or are you one who's recommending to wait and see how this IPO shakes out? >> Well, Bridget, if you can get shares of SpaceX on the offering price from your brokerage firm, I think that's a a wise uh investment. you may be able to trade out of it at a 50 or 100% gain very quickly if they'll let you. But history tells us that once these u stocks start trading and if you buy it on an expansion in price on the first day, meaning if it doubles in price, for instance, 6 months later, you're almost always behind the eightball with a loss. And there's two reasons for that. One, there have been a couple of earnings reports that have come out. So uh in the case of companies like SpaceX that are not making any money, that's a problem. Uh and then secondly, there are lockup agreements for the insiders that typically expire in about 6 months, meaning they they're not able to sell in the first 6 months. And so a lot of stock comes on the market. So it's a binary kind of thing. If you can get it on the offering, great. Don't chase it if it starts to skyrocket on day one. And it sounds like if you get it on the initial offering and this might not be the best buy and hold. It might be take take the profits while you can. Is that right? >> That's what the institutions do because uh for them it's a gift. Now some of them have to buy it. The index funds have to buy it. But in general it's good to sort of trade out if some of it if it doubles uh if you see a 50 to 100% move quickly it's a gift. So you know never look a gift horse in the mouth. >> All right. Well, let's move on to the AI story and the three stocks that you have for us today that are tied to this massive AI buildout happening across the country right now and have a lot of potential for some pretty goodiz returns for investors. Again, these are three names we've never even covered on the show and so that's why I'm excited for this list that you have for us today. And I know Mark, you and your team at Shaken Analytics have really been diving into all the different companies that are benefiting from this massive AI buildout. There's the robotic story, there's the space story, and there's the AI data center story, the bottleneck story, too. All of these reports can be found in a special offer from Mark and his team at Chaken Analytics for our market viewers. You can scan the QR code or click the link in the description to read more of what Analytics has to say about the AI story and where investors should be looking to put their money. Again, it's a special offer just for our viewers today. If you want to click that link, I have it for you right in the description. All right, Mark, let's get on to your list today. What is the first stock that you are looking at right now? >> I want to tee this up because there's a logical progression here and I think that the viewers will understand it much more clearly if we look at uh briefly at what's happened over the last 6 to 12 months. So, we've had a meltup in the stock market led initially by the semiconductor stocks, Nvidia, AMD, and then the memory chip uh stocks that you referred to, Micron, Western Digital. And then last week, we had blowout earnings reports from both Dell Technologies and Huelet Packard Enterprise. And the reason that's important is they make the computers that go into the data centers. That's where the chips live. those stocks had doubled in a very short period of time. Uh we were fortunate enough in in two of our market letters to have Dell in the portfolio as of April and May and then see the stock double. And the reason that's important is I think that in the the chip sector and in now in the hardware sector the biggest opportunities have been seen. But they suggest the three stocks that we're going to be talking about because where do you put the chips? You put them into computers. Where do you put the computers? You put them into data centers. So, someone's got to build those data centers and provide the electricity and the cooling to enable them to run uh efficiently. So, the first stock we're going to talk about is called Argon. The symbol is AGX and Argon um helps in the construction of power plants and the overall data center buildout is very very concentrated in the power plant space because of the uh what you call the bottleneck the need to uh cool and to provide electricity to run the computers. So, Argon's a stock that's had a big runup. Uh, it's been in one of our portfolios for almost a year now, but it's pulled back recently by about 15% and that's the perfect time in my view to buy the stock. It's a long-term play on the data center buildout, and I think that's where the biggest opportunities are going to be. As you said, these are the stocks people haven't been looking at, although the institutional investors have because the stocks have have done quite well this year, but Argon just reported earnings. the stock spiked up above 750 on the earnings report and now it's pulled back to around the 630 level. So that's a nice 15% pullback and that's what I think people need to be looking at right now. >> Yeah, the earnings report numbers for this one are really impressive for sure. But that runup was also very impressive like you said that there's already been a lot of growth in this stock. So I think what you mentioned already with how Dell and Intel have already seen a huge very quick double that the growth might be over and already realized in those stocks. Do you think that there's still room to grow more than making up the 15% the stock has lost in the last week or so? But do you think that there's significant long-term gains to be made in this stock? And how long do you think that AI data center buildout will continue to benefit names like Argon? I think the data center buildout's going to go on for another uh 3 to 5 years and and beyond. So people who are providing the engineering and construction management services uh for the buildout are on a growth path that I think is just going to keep moving forward. And you know the fact that the retail investor hasn't discovered stocks like this suggests that there's another wave of buying potentially to come. But I think the data center buildout is is the real growth story in the US stock market and uh a lot of institutional investors agree with that point of view. >> It's where all the money is flowing right now when we talk about all of these hyperscalers the mag 7 which you're saying don't spend so much of your time focusing on the mag 7 but I think it's important to look at where they're investing their money. the those mag seven companies are investing money in building out these data centers and the people building the power plants like Argon are a huge part of that. If you look at where these data centers are being built all across the country are being built in conjunction to where there's an actual power plant where they can get the electricity to power these data centers. So I think this is a really interesting play for sure. One thing to talk about here too is there any competition? uh are there many other companies doing what Argon is doing or is there something that really sets this one apart as uniquely positioned well for helping to support the data center growth? >> No, there's definitely competition because uh these are regional uh projects and so uh the second stock we're going to talk about MASTAC which is uh symbol MTZ provides a similar level of services uh that Argon does. This isn't about having something proprietary. This is about having experience and having done these projects over and over again. So that um we're not just talking about electricity. We're talking about the actual physical buildout of these data centers. And you need companies that have been involved with massive projects to keep things on track and uh on budget. And I know because my son is in the construction management software business, how difficult that can be because uh the the profit margins for the contractors are a significant issue and these companies provide all the services that pull the maintenance and the the buildout and the installation of the generators together. So they're critical in the chain, but it's the experience they have rather than anything proprietary. and the you know people are going to the experienced providers. Just to put it in perspective, a company like NASDAQ does about 15 billion in revenue. So these are serious companies. >> Yeah, there's so many contracts to go around that I think there's room for all of these names to benefit. So let's dive into NASDAQ a little bit more. This is the second stock on your list. Again, it's a really large company, but it's not a name that often comes up in a conversation about companies benefiting from the AI data center buildout. But if you look at the earnings report for this one, let's go there next. Uh it's really impressive for a company again of this size to see the kind of earnings beat that it did this last quarter. >> Yeah, they beat by 40 cents. The estimate was 99 cents for the quarter. Uh it was reported on April 30th. They actually came in at $139 and they talked about raising estimates for the balance of the year. So these are really earnings driven moves. It's not overnight doubles that we've seen in stocks like Intel and Dell. They're real earnings driven moves. And as I said, because I think this going to continue for another 3 to 5 years, I'm willing to pay a premium in terms of price earnings multiple. >> I think that's a really important point, Mark, that these are actual earnings numbers driven moves in these stocks rather than headline driven, hyperdriven moves. that when we see that massive move up in Dell, it's because it made a bunch of headlines for that really great earnings report and everybody was worried about missing out. I don't think we're seeing the same kind of uh hype or excitement level for names like this one. >> Exactly. And I might point out that when Dell spiked up a week ago Monday, we put out a memo saying to our subscribers that they should sell half of their Dell position at 120% gain in roughly 5 weeks and and stay with the other half. So you're playing with house money. So in the case of the stocks like Intel and Dell where they have had these incredibly uh quick and powerful moves. I think investors should take some money off the table even if it's short-term capital gains and then play with house money and and watch the data center buildout play out over a period of years. So, that's a sort of strategy tip, money management tip that I think most investors are happy to hear because they they don't know what to do when a stock's up 120% in 5 weeks. Not so easy to wrap your your head around that. So, the simple answer is sell half and then you're playing with house money. >> I think that's excellent advice. Thank you for sharing that tidbit with our viewers. It's great to see. Let's talk a little bit more about NASDAQ before we move on to the last name on your list because I think this one um is really interesting. If you look at the analyst forecast, I know that's not not a metric you look at quite as often, but just to see that there is a lot of analyst expectation on growth and I'm sure that has to do with a future outlook for growth for the company too and what their futures look like. What do you think it says about a company like this that's been around for forever. They're solid. They have the experience that's constantly getting upgrades from analysts who are excited about even more growth down the road. >> Well, analyst upgrades feed on earning surprise. So uh those are two of the factors in the power gauge and uh NASDAQ has a history of beating analyst estimates over the last uh six quarters and that translates into analysts raising their estimates. So that gets a very bullish rank in our power gauge and it also translates into um a rating trend meaning that analysts are upgrading not just their estimates but their ratings. So, uh, going from equal weight to overweight, going from hold to buy and so forth. And that's the pattern we like to see. And you're seeing it in all three of the stocks that we're talking about today. NASDAQ, very bullish earnings estimate trend, very bullish pattern of positive earnings surprises, and a very bullish trend of analysts raising their u ratings on the stock. When you combine it with being in an industry like construction and engineering, which believe it or not is a hot growth industry, it's a prescription for making money in the stock market. >> Yeah. And much like the first name we just talked about, this one's also on a pullback right now. It's down a little over 11% in the last month. So, it's it's a nice little pullback to be looking at getting into this one, too. >> Absolutely. And and you know, the the point being, you don't want to chase stocks making new highs or spiking up on news, as you said earlier. You want to wait and buy it at your comfort level when you have uh a sense that the dip buyers are going to come in and you want to be one of those dip buyers here. >> Mark, you are such a wealth of information on all these names. I'm excited to get to the last one that you have for us today, but if you want to learn more about the power gauge that Mark just mentioned or dive into those reports that really focus on all of the ways in retail investors should be looking at investing in this AI buildout right now. You can get all of that with this special offer from the chicken analytics team. Again, scan the QR code, click the link in the description, and you can take advantage of that offer today and get even more information from Mark. Again, Mark, you're such a great teacher. Thanks for all of this information for our viewers today. Let's get to the last name on your list. And again, this is a very not often talked about name. >> Well, the last name in the list is called Quant Services, and the symbol is PWR. And the symbol uh points you to what the company does. They are uh the infrastructure solutions provider for the electric and gas utility power generation industry. So the first two stocks we talked about are actually involved in the construction management and the buildout itself of the data centers. Quant helps the electrical power companies expand their capacity so that data centers can overcome these bottlenecks. And it's also the largest of the three stocks. revenue of about 30 billion, a market cap of hundred billion dollars. As with the other two, a pattern of positive earning surprises, analysts raising their estimates and upgrading their ratings on the stock. And uh here we've had a a shallower pullback, pullback of about 8% in the stock. It spiked up again in early May after their earnings report. They beat estimates by 35% same day, April 30th, that NASDAQ reported. estimates were 203 for the quarter. They actually reported 268 and the stock spiked up from uh 630 to 760 and now it's pulled back below 700 uh as of last Friday roughly the 690 to 710 area. So these pullbacks are buying opportunities in my view and as you pointed out at the beginning of the segment, stocks that not many retail investors are focused on. Obviously the institutional holdings are are very big but retail investors not so dialed in. And that's why we we're doing a segment like this to let people know that you don't have to just buy Nvidia or Micron or Dell to make money in this AI uh buildout. >> Yeah, there's a lot of companies that are benefiting right now. And I think one thing to look at with this one, and I think it applies, this question applies to all of the names that we talked about today. I think we see this pattern of the surprise earnings beat that comes and then the stock price sees a nice jump after that. Do you think that pattern can follow quarter after quarter with a company like this? If we continue to see the kinds of earnings beats that it's seen the last few quarters, do you think that there could be another potential spike in this stock coming when it reports its next quarter's earnings? This company over the last five years has reported positive um earning surprises in 18 of the last 20 quarters. So uh I think uh the answer to your question is yes. When a company reports a positive earning surprise, it catches some people offguard or they see the report or their brokerage firm uh highlights it and they jump in. You don't want to be the one jumping in. You want to be in before the earnings report comes out so that you take get the benefit of the spike instead of being the the guy who creates the spike. >> Yes, absolutely. And this is why talking about these stocks right now is a great time to be talking about these names. One last question on PWR in particular is talking about um how long that data center connection of boosting their earnings will continue. It's undoubtedly a a part of why they continue to see these earnings beats over the last few years is this increased demand for power with these data center companies. And again, you said it's not quite the construction piece of this this puzzle. So, do you think that the long-term benefit for this one in particular could be even longer lived? Are they going to continue to benefit even beyond the data center buildout phase? >> Absolutely. That's a really uh good question, Bridget. Electrical grid infrastructure in the US is ancient. It's vulnerable to natural disasters. It's vulnerable to cyber uh shenanigans. And we've got to upgrade our electric grid. And Quant Services is going to be doing this forever. They're going to have business from here till time uh immemorial because we've got to upgrade the grid, not just for AI, but for growth in the US. >> Wonderful. Great information as always, Mark. Thank you so much for taking the time to share a lot of great advice and some great stocks with our viewers today. We always love having you on the show. If you want to hear more from Mark, make sure to check out our conversation last month. We talked about a lot of other details, too. So, make sure you watch that full interview here if you missed it last