DELL, ORCL, ZS & This Week's Tech Earnings to Gauge Lasting AI Strength

but we have quite a few big tech names coming our way in the beginning of September. So I want to welcome Michael Monahan, partner and portfolio manager at founder ETFs, into the conversation. Michael, great to have you on. Thanks for joining us. Busy day at the NYC today. Once we start September, we have nine names reporting across seven sessions to give us our next look at the AI trade. After we heard from some of the big names throughout earnings season here. What is the biggest single item that you're looking for to learn from these names as they report over this week? Thanks, Marley. It's great to be here with you. So we're going to look at all nine of these stocks. I don't know that there's any specific indicator that we're going to look at other than the ongoing health of the AI build out. We had that kicked off last week with the Nvidia earnings. And this week we'll see names like Dell reporting tomorrow. And later on we'll see names like Zscaler reporting which tie not only the AI build out, but the security associated with keeping all these networks secure. And you've essentially divided the companies into three buckets here. You've got the AI hardware, we've got security and data names, and then we've got automation. As you look at your three buckets, which are you expecting to have the biggest earnings acceleration? I think we see strength across all three sectors. One of the ways about in the way that we invest is we look over a very long periods of time, and we really believe in our founders across all these categories to grow and to take advantage of the backdrop. So I wouldn't say that we're counting on any one of the three subsectors to outperform the other. We think it's a very strong backdrop for all of them, whether it be data security or, you know, building out the AI token factories. And we've got Dell coming our way first. So let's look at Dell here. They had their AI server revenue jump to north of $16 billion last quarter. Its AI backlog was north of $51 billion. There was discussion then around whether this was just a massive backlog story or if this was a sustainable earnings story. How are you looking at Dell going into this print? We believe it to be very sustainable, very durable. Again, going back to founder based investing, Michael Dell, one of the all time great founders, sort of seeing around corners and their move into a servers is, you know, these AI servers to do the agentic work workload is, is, is, you know, sort of par for the course. On how he thinks about the world. We saw the numbers coming out of Supermicro that are going to show that these margins are expanding, and we think it's very durable as more and more institutions want a organic workflow, both in their physical four corners, but also their virtual four corners. And by having on premises Dell AI servers, they're able to accomplish that. And Oracle, another name with a massive RPO backlog. Theirs was, I think, close to $640 billion, but they are also spending heavily. They had negative free cash flow. There's a lot of debt conversations and concerns about that debt. How do you determine whether the enormous backlog that Oracle has is an opportunity or a financing risk? We see it as an opportunity, and we start we think of some of these data centers come online. It will start to work through that and alleviate some of those concerns. You know, we've done some analysis to look at the the life of the assets that are being financed and the original GPUs that are running on Amazon. I think they have one of the largest running workflows. Their original GPUs are still running. We're seeing price increases on rentals of legacy GPUs. So GPUs are going to turn out to be a 9 to 10 year asset at a minimum. And so we think that financing them with debt is a smart move. And Credo is one of the less covered names, but certainly one in a space that I'm finding myself having more and more conversations about because they're riding this optical connectivity build out. How are you looking at Credo's positioning as we see this shift into the focus of optical infrastructure? As AI data centers become increasingly power and bandwidth constrained. So optical is one of the hot areas and the bottlenecks that will continue to receive strong momentum. Remember, remember, copper can't carry the bandwidth. It can't carry the distances. And so optical is the way that we're going to continue to build out these higher scale, higher bandwidth data centers. And let's talk about Zscaler too. I mean their growth outlook was only about 16 to 17%. And I remember when they gave that guidance, there were many flags about whether or not that was conservative guidance or whether there was something concerning in there. Are you looking at this as just conservative guidance from management to be extra careful, or is there perhaps a slowdown that needs to be more taken more seriously? I think it's conservative guidance. Jay, is a very, you know, brings an engineering mindset to the way he runs his companies. I think he's being conservative. The amount of zero trust security needed in networks is rapidly accelerating. The frontier models are unfortunately, making it easier and easier to penetrate networks. And zero trust is one of the best ways to protect your network. And Zscaler has one of the best platforms to do that. So we think it was a conservative guide, and we think you'll see Reacceleration and Michael, as you look across these nine names, which company do you view as having the highest bar going into earnings. Meaning we've seen the bar set high for a lot of these AI names. They put up good to great numbers, and they just didn't seem to be good enough for some reason, because of how high the bar was. Who is the biggest candidate for that position in this group? I don't know if it's any individual. I think what's holding back some of these beat and raise and stocks starting to go higher is the macro. We've talked about the three ways moving through the market. And I think the Middle East instability along with, you know, people still digesting Wash's comments from Jackson Hole. I think that's really what's muddying up some of these individual stock performance. So I don't know that any one of them having a big beat and raise is would be what breaks the deadlock. I think it's sort of the market deciding on a direction we're going to go, and that will allow some of these growthier names to move higher. And are there any names in this group that you think are currently being underestimated by the market? We think the most disliked stock in the market right now is Oracle. As you mentioned earlier on the segment. Absolutely massive backlog. Larry Ellison again founder sort of the original OG founder, saw round corners a couple of years ago, started building out his data center strategy, corporates and government that need highly secure private data live on Oracle. And we think they're going to continue to do well in that space. And so we think it's the most underappreciated name in the market that we follow with perhaps the biggest upside. Michael, really appreciate you taking the time to preview some of these earnings and your expectations for this next round of earnings that we have coming our way starting