In This Article:
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(0:30) - Should You Be Buying The AI Stock Sell-Off?
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(5:00) - Tracey's Top Stock Picks For Your Portfolio Right Now
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(22:45) - Episode Roundup: ETN, STRL, SMCI, CEG, NVDA
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Podcast@Zacks.com
Welcome to Episode #432 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey is going solo to look at AI stocks after the DeepSeek panic.
DeepSeek is a Chinese AI start-up that has, allegedly, come up with a cheaper and easier way to train AI. It may result in less spending on the AI infrastructure, including the chips, datacenters, and the build out inside the datacenters like racks as well as cooling.
On Jan 27, 2025, in panic selling, the infrastructure AI stocks sold off. Some were down over 20% on the session. Since Jan 27, they have rebounded but remain weak.
Tracey looked at 5 of the infrastructure stocks to ask: should you be buying after the sell-off?
5 AI Stocks: Deals or Not?
1. Eaton Corp. (ETN)
Eaton is in power management. It’s tied into the AI Revolution trade as it makes server racks and does thermal management. Earnings are expected to rise 11.5% in 2025. However, Eaton will report earnings on Jan 31, 2025, so be sure to check for earnings estimate revisions after the earnings report is out.
Shares of Eaton fell 12.6% in the four days after the DeepSeek panic. Eaton trades with a forward price-to-earnings (P/E) ratio of 26.4. A P/E under 15 is considered a value stock.
Is this a buying opportunity in Eaton?
2. Sterling Infrastructure, Inc. (STRL)
Sterling Infrastructure is a mid-cap company with a market cap of $4.5 billion. It is involved in building the datacenters, and other infrastructure projects. Sterling is expected to grow earnings by 24% in 2024 and another 8% in 2025.
Shares of Sterling have been hit hard in the sell-off. It’s down 25.3% in the 4 days after the DeepSeek panic. Sterling trades with a forward P/E of 21.8.
Is this a buying opportunity in Sterling Infrastructure?
3. Super Micro Computer, Inc. (SMCI)
Super Micro Computer produces racks and server systems. Earnings are expected to soar 43% in fiscal 2025.
Shares of Super Micro Computer are down 15.9% in the 4 days after the DeepSeek panic. It’s the cheapest of the infrastructure stocks. Super Micro Computer trades with a forward P/E ratio of just 8.8. A P/E under 15 is considered a value and Super Micro Computer is under 10.
Is this a buying opportunity in Super Micro Computer?