Andrew Graham’s Top Trade Now — And His Signal to Buy More

Joining me now is Andrew Graham, managing partner, Jackson Square Capital. Andrew, great to have you back. Thanks for having me back. It's good to be here. Second time this summer. You were last here in early July. So we'll check back in with you on on your how your market view has changed. But before we do, let's talk about Nvidia because Nvidia just delivered another record quarter getting rewarded today, which was sort of the question will Nvidia be higher or lower after earnings. Does this put the AI spending slowdown. Fear is officially too bad. No definitely not. You know it's just going to creep up again I suppose. I think Nvidia the most you know what you said is up today after earnings. They had four quarters in a row where they had excellent earnings and awesome guidance. And the stock went down. It didn't go anywhere. And so the multiple is compressed down to 21.5 times as low as it's been in a decade. Should you own it? Yes. You should definitely own the stock. Is the the questions around circular financing and all the rest of it going to go away? No, it's still going to be an issue. But hey, our bull market climbs a wall. I suppose a lot of these stocks have to do their own climbing of walls. And Nvidia I think is, is is laying the foundation for the full stack of AI. And that includes, you know, owning the land and and the transportation and all of it. So you say, should you own it? Yes. Should you buy it here? Yes, yes. When you were last on and early July you actually picked Broadcom over Nvidia. Yeah. Do you still pick it here. I'm not afraid of Broadcom or it's sort of mini me which is Marvell which is going to report earnings tonight. Both I think have a great opportunity I think it's coming later though. So you're going to get customer clients or corporates, they're going to have multiple Asics, right? Different different semiconductors for different purposes within inference. And the probably in my my mind, the guess is that those are the incumbents like Broadcom and Marvell are the ones they're going to want to go to for a partner in terms of developing those chips. Yes. It's coming. It's probably a 20 2829 kind of story. But yeah Broadcom has been a little bit weaker than I would like to see. But I'm not afraid of it at all. And and I think you give it a little bit more room than you would another stock because business is this is. Booming and it has bounced since you were last on. But last time you were here we were seeing this pullback in tech stocks. And you said that was the opportunity to reload. It has since bounced. Yeah. So has that ship sailed. No not at all. I think the the bounce that you got was just after sort of a momentum on mine, which is I think in this cycle, this is probably the eighth time it's happened and it just happened again. We had three weeks of calm, and then all of a sudden we got into August and you saw, you know, the momentum pairs like down 33% or whatever. So it's really a unique time. I think it goes back to something which is the pain trade, which is always to look where everybody's sitting on one side of the boat. You got to have to take the other side of it. And I think as we go into September and everybody's got their, you know, head full of September seasonal weakness and midterm elections, all the rest of it. The pain trades probably too much cash. So I think you put it to work. Just look to put it to work. Admittedly it's we're in the middle of a summer vacation season, and so it's a little tough to, like, derive too much signal from price action. But, I think when we get back and September conference season starts, I think you're going to see, opportunity there because that conference season is usually an opportunity for for corporates, for management teams to guide the sell side lower. I don't think that's the case. It wasn't last year, and I don't think it's going to be this year either. We're in the middle of a just a boom in earnings growth. If I have cash to put to work and I'm underweight tech, if I don't have enough exposure to tech right now, do I put it to work today or do I wait until September when maybe we see or you know, some of the volatility that we could see around midterms. So what we do a little bit of technical stuff. We don't like to admit it. And I'm a CFA. I went schooled of you know I supposed to know that. But so we you know, in the dark, in the shadows, we're doing some technical work. They're not perfect yet. They're not there yet. And we want to make sure we're buying stuff at the exact right time, because what we found is clients don't like to lose money, so none of them look super easy. I think Marvell looks good going into earnings tonight. I think they're going to get rewarded. The deal they did with Google is $20 billion is transformational for that company. And I think the the buy side at the time was at $12 billion. So I don't know if it's in a lot of numbers yet. They're going higher, I would suspect. I think they get rewarded. Okay. So Marvell is a pick your two highest conviction make seven picks. You know, last month or I guess, yeah, in early July, July 9th were Alphabet and Amazon. Would you say those are still your highest conviction picks? Yeah. And, you know, I throw Microsoft in there as well. And I think there is a, just a group of software stocks that seem to be built for this inference, a genetic, economy. Microsoft seems to be one of them. And so does Twilio. You know, it's looking at the quarterly reports and so does Shopify, believe it or not. And, Cloudflare as well. So those, those numbers, just hockey sticks straight up in Q2. I want to see what they do when they report next. But yeah, that's that's an interesting group. I think within software there's that little niche in there. And those are the names that we've identified that I think look good. There are a lot of software stocks on steeper sales and Twilio, which is up more than 60% year to date. Cloudflare is up 50%. Names like snowflake up 50%. So you say those are the beneficiaries of this inference economy. What's your view on software overall? Do you find any first of all, would you buy those names here? And do you have any cheaper names that you could recommend. We would buy Twilio and here we own Cloudflare. Admittedly it's an expensive stock right. A very expensive stock. But they're really well positioned. So you wait for your, your, pick your spot on Cloudflare. I think when you're talking about sort of the old, you know, the, the, the out of favor software names like, Salesforce, you know, just had a good earnings print. In favor today, up 20%. For sure. And I'm sure there's a lot of people are short the stock. And you got to cover but they're you know, they're they're showing signs of the ability to monetize their AI product. And at higher, higher levels, higher prices. So good for them. And I suggest, you know, it's probably going to be others as well. So is it time to trade out of semis in the software? No, you probably have enough dry powder. You could add some for me. I would add those faster names. But on pullbacks if you get them small pullbacks. But yeah I would add those faster. If you could only add one snowflake. Cloudflare. Twilio. Which one would it be. I think it would have to be Cloudflare. I mean, it's been with me for a long time. We've owned it for a long time, almost as long as we've owned Nvidia. It's a newer company. But yeah. So that's, that's I think the, the crown jewel. But we have bought little bits and pieces of Twilio, sort of adding it slowly as well. Time for a quick break. Thanks to GoDaddy for sponsoring today's video. 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Click the link in my description or scan the QR code to start using GoDaddy arrow AI builder with 50 free credits. Thanks again to GoDaddy for sponsoring today's video. We haven't gotten to Rapid Fire yet, but Cloudflare or Microsoft. In here. Microsoft. Yeah, at the moment. So across all of tech chips, hyperscalers, networking software, cybersecurity, where do you see the most upside from here? Networking. Networking for sure. So you've got scale across coming which is data center interconnect. Right now there's about a million ports dedicated to DCI in the United States. That's going to go to 20 or 30 million over the course of the next four years. That's a big opportunity for anybody who's in the Jericho L3 style switch making business, which is Cisco and Arista. And those two names look great. And as you move further out the curve and you get to scale up architecture, which right now is dominated by NVLink, which is, a product, of course, of Nvidia. That's all going to change to Ethernet based products that, that these guys makes, Cisco and, and Arista. So those are probably our two favorite names right now. Period. Full stop. And we want to own them for the long haul. Not just your favorite names, though. They're both up almost 50% or more than 50%. Not too late to get in. Not too late to get in. I look, you know, we look at these things, I look at it every day. Unfortunately, I'm moving around a little bit today but spent a lot of time, you know, checking things out. Arista looks great right now. So your price target was 7840 by your end for the S&P 500. Are you sticking with that? No. We're going to list it based on what we've seen from earnings and estimate revisions estimates. You know, since the start of the Iran war or whatever have gone up 16% for 2026. We're going to do and the S&P going to do 32% earnings growth this year, something like that. And next year, if it goes down to 1213 I don't care. That's not a bear market. That's double digit earnings growth. And you don't want to pick a fight with that. So lift it to what. Sure. 8500. It's such a tough thing, especially by year end. Like I don't work on a calendar year and I'm like, on a rolling 12 month basis. That's all that matters, is that we stay ahead of the curve that way. But, Higher. Yeah. Okay. Okay. Put a number on it. If I had $10,000 sitting in cash right now, how much of that money would you put in this market today? 2000. Okay. Because I think it's another opportunity here and there. Just kind of waiting for spots. Like nothing looks perfect, nothing looks easy, and a lot of it's kind of murky because of the time of year, you know, and I think one of the reasons why I think what the Treasury probably stepped up their purchases because of illiquidity this time of year, it's my least favorite time for the market. It's dull. It's boring. The price action doesn't really mean as much as it should. But again, I think you're going to have a really bullish September, corporate, meeting season. And, management teams will have an opportunity to sort of guide, you know, whether they give numbers or not. And I think you'll see numbers go higher at those meetings in September. So we're looking for September. Seasonal slowness. Seasonality is such a dumb concept anyway for me. And I would come off and and midterm elections I think 32% earnings growth wipes all out out 12% next year 13% if that's your guess wipes it all out. So I'm trying to look at the timeline though because that's what yeah August 27th right now. And you're saying September is going to be bullish. So yeah the other 8000 of that 10,000. What I think a pullback like tomorrow you think or. Yeah I don't know. But I wouldn't say so much pullback. It's not just pullback. It's it's price and time for us. And you you can see it. And we've created technical screens that help us get to that moment where you can tell when things are sort of washed out. When things change I think soon. What's the signal that you'd be looking for? What's the signal that a retail investor should say, okay, I think right. But my chance. There is there pullbacks to oversold levels and whatever you want to use as your guide there. So if you're using a slowed stochastic or something like that, I think that's probably the best tool. And then within, you know, good technical chart, Patterson. You've got to have that fundamental pipeline too. Like the good thing about being a professional is you've got all these sell side firms giving you, you know, stuff all the time. You've got this pipeline and, and it's really important that you stay on top of these stories. So it's it's tough. Somebody comes on TV and tells you to buy marble and, you know, you might own it for a while and all of a sudden the story falls apart. So staying on top of the story is critical. And the the fundamentals of it are all the names that we've mentioned are excellent. It's just like they're not quite there yet, and I'm hoping that they get there. And I think it's just time. I think maybe even, you know, two weeks from now. Okay. We've focused a lot on tech. Yeah. What are your favorite areas outside of tech to invest in right now? Health care. Yeah. And then, you know, if you want to go back to the seasonality midterm thing, health care is the one that acts the best through there. It has defensive characteristics, obviously, and it's had a good run to Lilly's our biggest position in the broad health care universe. But we've recently added to our dividend yielding portfolio of our lower beta, strategy. We've added some of the, you know, health care services names like Unh and CVS and so forth, grab the dividend and and go along. So, health care would be number one. I'm really interested in retail, and in consumer discretionary. You saw the flash PMI data last week for August. It's probably lines with about 3% real GDP growth. We did 1.5% real GDP growth in Q2. That's a pickup in business momentum. And I think that's what you've got to brace for. And it's almost like the cyclical stocks. And you can put consumer discretionary in that group look like they're waiting for permission you know, to go higher. And I think that they could release higher as well. I'm not sure which one to pick in retail and apparel and so forth. But in health care it's a lot easier. The pharma names all look good. And I think the, the, the management, health care management stocks. So how do you play the consumer discretionary trade then if the stock picking could be hard because we did hear from a lot of retailers. You're still hearing from them in terms of earnings. But a lot of winners a lot of losers. Yeah. Our favorite is just the off of price stuff. You know the TJX which is had a big pullback but sort of a weird execution issue last last quarter. And something to do with their buying the wrong you know, stuff. They didn't have enough of it. So I would put that on double secret probation. But going back to you know, Costco King Costco and and those names, even Walmart after a stumble that was a one time stumble. So, yeah, if you want to take the risk and the volatility down your account, you've got too much tech. Then you'd probably, you know, add those bigger names. Okay. So we have tech healthcare consumer discretionary in the portfolio. What's out of the portfolio. Utilities are out. I'm not sure if they're over there in a big way either. REIT's are very small with us. Again, it fits in that that dividend yield think lower beta strategy and and materials which we which we want to own. But we're having a hard time, you know, finding the right the right stocks. We own Ivanhoe Electric which has a big copper mine coming online in North America, in Arizona, Santa Cruz copper mine in, next year. So I think that's a stock to look at, but it's a smaller market cap is on Freeport, right. Our, HP it's just smaller. So, that name we own, we do own some Freeport kind of running away here. But, yeah, it's tough. And materials and the chemicals aren't going to work if the oil's moving through the Strait of Hormuz because Dow and Lion Dell, the reason why those workers, they're using natural gas as a feedstock to make polyethylene versus all competitors globally who use oil. So those are off the board. So materials are tough. Yeah. There's a lot that's off. We're very heavy tech. I would say we're 55% time. So you give a lot of names. I'm sure our viewers will be happy to hear a lot of those stock picks. Yeah. If you could only buy one safest bet of all the names that you've mentioned today, which would it be a to? I took a big deep and I. Said, that's not Nvidia. I was expecting Nvidia but okay. No, no. It's going to be Cisco or it's going to be a restaurant. And Cisco is like everybody's like, no, I don't want to own Cisco. So I think it's their dad's legacy. Yeah. Right. The old business or whatever. Their products are great and they're very well received for the data center and of course, campus networking, Swift business very well receive. And, I just I think that's the name that's, you know, you're gonna grab a dividend. So the slower name, the faster name is Arista. Okay. Yeah. All right, let's pivot to our rapid fire round of this or that, although we've kind of. Yeah, we included a few of those in already you've played before. Quick questions, quick answers. No heading hedging. Are you ready? Yeah. There's no clues either. There is no giving them no blindside. Questions ahead of time. Ready. All right. Here we go. Yeah Cisco or Arista Networks. Also just did that I'm going to go at the moment Arista. Buy this market or wait for a pullback. Well I guess broadly buy this market. Stay invested or raise some cash. Stay invested. Tech buy now or wait for another shakeout. Find out semis or software. That's a really good one. I think still semis. Chips or networking? Networking. Google or Amazon? I'm going to go with Google. Nvidia or Broadcom. Nvidia. Change of answer there. Snowflake or Cloudflare, Cloudflare, Palo Alto or CrowdStrike, Palo Alto, Okta or CrowdStrike. Bolt on. CrowdStrike. Anthropic friend or foe of the I trade. Wow, that's a good question. I think they're going to have to change the way they do things at anthropic, to be perfectly honest. Eventually get there. Maybe, I would say, friend, because they're on the frontier there, you know, but, Any friend OpenAI or anthropic? Oh boy. I would say OpenAI. Bitcoin at 80,000. Opportunity or. Opportunity. Bitcoin or gold? Gold. All right. Finish this sentence. The one stock I'd buy today is Marvell. Instantaneous gratification. You got to print this this evening. The one stock I'd sell today is wow. Gosh that is a hard one. Is there a pass button? How about the one stock I'd avoid today is. Yeah. I would, I would say I would avoid the, the, the hard disk drive companies. I think they're pretty rich. There's room for them to move higher, but they've, you know, had such a big run. So, you know, you're in the Western Digital kind of world, and that stock has been a little bit weaker. So. But Western Digital in there, even though you're picking a fight with an amazing, you know, growth trend. The next leg of AI leadership comes from. Well, it's open source models. And it's going to, you know, it's going to proliferate faster, with the open source models. And now that Nvidia is in that business, apparently, and others. And that was kind of my problem with the anthropic OpenAI question. I really think that lights it up here. Things are getting less expensive. OpenAI I just did a, price cut, as well. And I think it's just going to drive adoption really, really quickly. So this is the this is the part where it really picks up. And Jensen had some way of framing, you know, this is the golden age of of startups and so on and so forth. I would believe him when he says that. I know sometimes comes off a little promotional, but it feels to me like that's the case. Like when you go back that second quarter earnings from Twilio and Shopify and all the rest of it, it looks like crazy hockey stick. So the most misunderstood trade is. I again, I guess the pain trade is, I think, misunderstood when, when and where and what is where. It's the place to be. And I think, like I said, cash is the is the main trade. So waiting for the mid terms which I've heard from clients and so on. We love our clients, but sometimes, you know, we're getting the consensus view and the pain trade is all about taking the other side of the consensus view. And I do know that there is a lot of cash on the sidelines. And so, yeah, keep your eye on that. That's been the most consistent trade all year. If you can identify where everybody's sitting, you know, you got to take the other side. And and that's paid off. The one thing that could break this rally is. I think it's, widening credit spreads. You know, there's just so much that you can absorb. The investment grade market can take in, in terms of, of new issuance. And you've got, you know, Broadcom $60 billion deal that comes in. It's hard to bring it to in the middle of summer vacation season. But all the debt issuance that's coming in $250 billion from the hyperscalers next year. It looks like $400 billion probably. And what's it like to get done in issuance? And I just think it has to happen a little slower because the the market can't digest that. They're not natural buyers. Like the smartest move a retail investor could make today is. I would make sure. Yeah. Know what your own, add, positions when they're oversold, only. And, try to hang on to the winners as long as you can. So a lot of sage advice on there, but, I've been doing this for 41 years. Yeah. You got to sell the losers and keep the winners. And it's pretty apparent once you buy it, you're going to know right away if you have a winner or a loser. But you couldn't think of a loser to sell. I know, I know, it's rough. I've already sold them. That's the thing. So yeah, we don't have any losers in the book right now. And now those are the names that we follow. So we're happy to take a real nice loss, so long as it's small. Keep it tight, like 15%. And then we're going to move on. We're going to keep that, like a tax asset and then take that cash and redeploy it. We want to redeploy whatever cash we have right now. It's we're finding it difficult, but, you know, we'll get there I think, in the next couple of weeks. Okay. All right. We'll leave it there. Thank you so much. Really appreciate it. Thank you. Lots of good picks and lots of great insight. That's Andrew Graham, managing partner in Jackson Square Capital. If you enjoyed this street talk, check out our full interview with Anastasia Amoroso. She explains why the eye trade is changing and where to invest next.